News Update – Recent Mergers & Acquisitions In The Communications Industry
Mergers & Acquisitions: Infralink Holdings Purchasing LS Networks
November 6, 2020 – The FCC’s Wireline Competition Bureau is seeking comment on a Section 214 application filed by CEC Resources, Inc., LightSpeed Networks, Inc., d/b/a LS Networks, and Pacific Broadband Partners IA LLC requesting consent to transfer control of LS Networks to Pacific Broadband Partners. LS Networks is an Oregon corporation that operates a fiber-optic communications network primarily in Oregon and Washington, but also serves customers in California and Idaho. LS Networks provides competitive communications services to schools, libraries, and medical facilities and to residential customers. CEC Resources is the controlling majority shareholder of LS Networks, and is a wholly owned subsidiary of Central Electric Cooperative, Inc., a not-for-profit electric cooperative operating throughout central Oregon. Pacific Broadband Partners is a Delaware corporation created for purposes of the proposed transaction. It does not provide telecommunications services and is an indirect wholly owned subsidiary of Infralink Holdings IA LP, a limited partnership investment fund and Delaware corporation. Comments are due on or before November 20, 2020, and reply comments are due November 27, 2020.
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Mergers & Acquisitions: Future Fiber Buying Ontario Telephone, Trumansburg Telephone, & Finger Lakes Communications Group
November 6, 2020 – The FCC’s Wireline Competition Bureau is seeking comment on a Section 214 application filed by Ontario Telephone Company, Inc., (OTC), Trumansburg Telephone Company, Inc. (TTC), Finger Lakes Communications Group Inc. (FLCG), and Future Fiber Parent, L.P., requesting consent to transfer of control of OTC, TTC, and FLCG to Future Fiber Parent. Comments are due on or before November 20, 2020, and reply comments are due November 27, 2020.
OTC, TTC, and FLCG are all New York corporations that provide telecommunications services to business and residential customers in north central New York. OTC and TTC operate as rural incumbent local exchange carrier with eligible telecommunications carrier status in New York. OTC has approximately 1,429 access lines in portions of Ontario county, while TTC has approximately 3,085 access lines in portions of Seneca, Schuyler, and Tompkins counties. FLCG is a resale provider of intrastate and interstate long distance services within the areas served by OTC and TTC. Future Fiber Parent is a Delaware limited partnership that is primarily owned and controlled by funds and entities affiliated with Oak Hill Capital Management, a private equity fund based in the United States but whose funds are organized in the Cayman Islands. The application has not been streamlined due to the complexities. Because the transaction involves foreign ownership, the Wireline Bureau has referred. the application to the relevant Executive Branch agencies for their views on any national security, law enforcement, foreign policy or trade policy concerns.
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Mergers & Acquisitions: Swedish-Owned Telia Carrier U.S. Being Sold To Swedish Company Polhem Infra KB
November 3, 2020 – The FCC’s Wireline Competition Bureau is seeking comment on a Section 214 application filed by filed by Telia Company AB, Telia Carrier U.S. Inc., and Oura Bidco US, Inc. requesting consent to transfer control of Telia Carrier U.S. from Telia Company AB to BidCo US. Comments are due on or before November 17, 2020, and reply comments are due November 24, 2020.
Telia Carrier U.S., a Delaware corporation, operates a nationwide fiber-optic communications network. Pursuant to domestic and international Section 214 authority, it provides carrier-grade or wholesale services to carriers, and offers a range of information services and telecommunications services. Telia Carrier U.S. is a direct wholly owned subsidiary of Transferor Telia Company AB, a Swedish multinational telecommunications company. BidCo US is a corporation organized under Delaware law for purposes of completing the proposed transaction. BidCo US is indirectly wholly owned by Polhem Infra KB, a Swedish limited partnership that was established in 2019 under Swedish law for the purpose of managing and investing in infrastructural assets for the benefit of the Swedish Parliament and the Swedish people.
Telia Company AB and Polhem Infra KB have entered into a Master Share Purchase Agreement, pursuant to which Telia Company AB will sell its entire stake in 34 Telia Carrier subsidiaries, including Telia Carrier U.S., to Polhem Infra KB’s wholly owned indirect subsidiaries. The Wireline Bureau has referred the application to the relevant Executive Branch agencies for their views on any national security, law enforcement, foreign policy or trade policy concerns related to the foreign ownership of the applicants.
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Mergers & Acquisitions: Private Equity Firm Stonepeak Infrastructure Partners Buying RCN, Wave Broadband, Grande Communications, & En-Touch
November 1, 2020 – Stonepeak Infrastructure Partners has entered into an agreement to purchase Astound Broadband from TPG Capital and Patriot Media Management for $8.1 billion. Astound Broadband is the parent company of regional cable and broadband providers RCN Telecom Services, Grande Communications Networks, Wave Broadband, En-Touch Systems, and various subsidiaries of those companies. The group comprises the sixth largest cable and broadband operator in the U.S. TPG is a global alternative asset firm founded in 1992 with investment platforms across a wide range of asset classes, including private equity, growth venture, real estate, credit, and public equity. TPG ultimately owns and controls Astound, RCN, Grande Communications, Wave Broadband, and En-Touch. The deal is expected to close in the second quarter of 2021.
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Mergers & Acquisitions: Intelsat Purchasing Gogo’s Commercial Aviation Business For $400 Million
November 1, 2020 – Commercial satellite operator Intelsat is purchasing Gogo Inc.’s commercial aviation business for $400 million. Intelsat is currently operating under Chapter 11 bankruptcy protection, but has received approval for the transaction. Gogo Inc., headquartered in Chicago, Illinois, is a provider of in-flight broadband Internet service and other connectivity services for commercial and business aircraft. According to Gogo’s third quarter 2020 financial disclosure, the sale remains on track to close before the end of the first quarter of 2021. Gogo has cleared the Hart-Scott-Rodino antitrust process and received all foreign antitrust approvals, although FCC and CFIUS clearance and one foreign telecommunications approval is still outstanding.
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Mergers & Acquisitions: Proper Connections Purchasing Richmond Telephone
October 29, 2020 – The FCC’s Wireline Competition Bureau is seeking comment on a Section 214 application filed by Magna5 Holdings LLC and Proper Connections, LLC requesting consent to transfer control of Magna5 RTC LLC d/b/a Richmond Telephone to Proper Connections. Comments are due on or before November 12, 2020, and reply comments are due November 19, 2020.
Magna5 Holdings is a Delaware limited liability company that provides, through affiliates, a variety of communications services including residential and enterprise voice, data, cloud, and managed IT services. Magna5 Holdings is controlled by NewSpring Holdings Management Company LLC and affiliated with NewSpring Holdings LLC, a private equity fund. Richmond Telephone, a Delaware limited liability company, is an incumbent local exchange carrier that provides voice and broadband services in Richmond, Massachusetts. Richmond Telephone is a wholly-owned subsidiary of Magna5 Holdings.
Proper Connections, LLC, a New York limited liability company, is a family owned and operated technology consulting company. Neither Proper Connections nor its owners are currently affiliated with any telecommunications carriers. Pursuant to a October 16, 2020, Membership Interest Purchase Agreement, Proper Connections will acquire the membership interests of Richmond Telephone from Magna5 Holdings. Upon closing the transaction, Richmond Telephone will become a wholly-owned direct subsidiary of Proper Connections. Under the terms of the agreement, Richmond Telephone’s name will be changed immediately following the closing of the deal.
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Mergers & Acquisitions: TPG Global LLC Acquisition Will Create The Sixth Largest Cable Operator In The U.S.
October 7, 2020 – The FCC’s Wireline Competition Bureau is seeking comment on a Section 214 application filed by Digital West Holdings, Inc., Digital West Networks, Inc., Norcast Communications Corporation, Blue Rooster Telecom, Inc., and Radiate Holdings, L.P. requesting approval to transfer control of Digital West Networks, Norcast, and Blue Rooster from Digital West Holdings to Radiate Holdings. Comments are due on or before October 21, 2020, and reply comments are due October 28, 2020.
Digital West Holdings is a Delaware investment holding corporation for Digital West Networks. In 2017, Digital West Holdings and Digital West Networks acquired all of the interests in Norcast and Blue Rooster. Digital West Networks is a California corporation that holds domestic Section 214 authority, as well as a Certificate of Public Convenience and Necessity (CPCN) from the California Public Utility Commission (CPUC) to provide intrastate local and long distance telecommunications services. Norcast, a California corporation, holds domestic Section 214 authority, as well as a CPCN from the CPUC to provide intrastate telecommunications services. Blue Rooster is a California corporation that holds domestic Section 214 authority, as well as a CPCN from the CPUC to provide intrastate telecommunications services.
Radiate Holdings, a Delaware limited partnership, is a holding company that is majority owned and controlled by certain investment funds ultimately controlled by the principals of TPG Global, LLC. Radiate Holdings is managed, operated, and controlled by a Delaware limited liability company, Radiate Holdings GP, LLC, which is wholly-owned by its sole member, TPG Advisors VII, Inc., whose two shareholders are the persons with ultimate ownership and control of TPG Global, LLC. All of the entities in the Radiate ownership chain are U.S.-based. TPG Global, LCC is a global alternative asset firm founded in 1992 with investment platforms across a wide range of asset classes, including private equity, growth venture, real estate, credit, and public equity. It “currently has approximately $72 billion of assets under management.”
TPG Global, LLC controls the RCN Telecom Services entities, Grande Communications Networks, LLC, the Wave entities, and the En-Touch entities which, as of February 27, 2020, have over 990,000 customers and provide services such as high-speed internet, cable services, broadband products, digital TV, phone services, and fiber optic solutions. The deal will create the sixth largest cable operator in the U.S.
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Mergers & Acquisitions: Liberty Broadband Corporation & GCI Liberty, Inc.
September 18, 2020 – The FCC’s Wireline Competition Bureau, International Bureau, Wireless Telecommunications Bureau, and Media Bureau are seeking comment on applications filed by GCI Liberty, Inc. (GCI Liberty), and Liberty Broadband Corporation (Liberty Broadband) pursuant to Sections 214 and 310(d) of the Communications Act, the Cable Landing License Act of 1921, and various FCC rules seeking approval to transfer control of various licenses and authorizations held by operating subsidiaries indirectly held by GCI Liberty to Liberty Broadband.
GCI Liberty is a publicly traded Delaware corporation. Its wholly owned subsidiary, GCI Holdings, LLC, through operating subsidiaries, provides local exchange, exchange access, domestic intrastate and interstate interexchange, commercial mobile radio and data, cable television, Internet access, broadcast television, wholesale submarine cable capacity, and other communications services throughout Alaska, between Alaska and the 48 contiguous states, and in certain other geographic regions.
Liberty Broadband is a Delaware publicly traded holding corporation. Liberty Broadband beneficially owns approximately a 23.4% equity interest (on a fully diluted basis) in Charter and a 25.01% voting interest in Charter. Liberty Broadband’s wholly-owned subsidiary, Skyhook, offers mobile positioning and contextual location intelligence solutions.
Upon consummation of the proposed transaction, Liberty Broadband will own GCI Liberty’s existing wholly-owned subsidiaries, including GCI Holdings and its operating subsidiaries that hold FCC licenses and authorizations to provide communications services. Comments are due on or before October 2, 2020, and reply comments are due October 9, 2020.
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Verizon Acquiring TracFone In $6 Billion Deal
September 14, 2020 – Verizon has announced it has entered into an agreement with America Movil to acquire TracFone Wireless, Inc. Verizon will pay America Movil $3.125 billion in cash and $3.125 billion in Verizon common stock. Verizon expects the transaction to close in the second half of 2021. TracFone is a mobile virtual network operator (MVNO) that utilizes the networks of all three nationwide mobile wireless providers, and provides service under various brands, including Simple Mobile, Straight Talk wireless, and SafeLink Wireless. TracFone specializes in prepaid wireless service, and is estimated to have over 20 million prepaid wireless subscribers and over 90,000 retail locations in the U.S.
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Mergers & Acquisitions: Future Fiber Purchasing Otelco
September 10, 2020 – The FCC’s Wireline Competition Bureau is seeking comment on a Section 214 application filed by Otelco Inc. and Future Fiber FinCo, Inc. requesting consent to transfer control of Otelco Inc. and its subsidiaries to Future Fiber. Comments are due on or before September 24, 2020, and reply comments are due October 1, 2020.
Otelco is a publicly traded Delaware corporation and holding company that provides telecommunications services through subsidiaries in Alabama, Maine, Massachusetts, Missouri, New Hampshire, Vermont, and West Virginia. Future Fiber, a newly formed Delaware corporation created for the purpose of completing the proposed transaction, is primarily owned and controlled by funds and entities affiliated with Oak Hill Capital Management, a private equity fund based in the United States but whose funds are organized in the Cayman Islands.
Pursuant to an Agreement and Plan of Merger, Olympus Merger Sub, Inc., a Delaware corporation and direct, wholly owned subsidiary of Future Fiber created for the transaction, will merge with and into Otelco where upon the separate corporate existence of Olympus will cease, and Otelco will continue as the surviving entity. As a result, Otelco will be a direct, wholly owned subsidiary of Future Fiber, and Otelco’s telecom subsidiaries will be indirect, wholly owned subsidiaries of Future Fiber.
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Merger & Acquisitions: Consolidated Companies, Inc. Purchasing Another Nebraska Rural ILEC
September 3, 2020 – The FCC’s Wireline Competition Bureau is seeking public comment on a Section 214 application filed by Sodtown Telephone Company (STC) and Sodtown Communications, Inc. (SCI) requesting consent to transfer the telecommunications assets and customer base of STC to SCI. Comments are due on or before September 17, 2020, and reply comments are due September 24, 2020.
STC is a Nebraska a rural incumbent local exchange carrier (LEC) serving approximately 56 access lines in portions of Buffalo and Hall Counties in Central Nebraska. SCI is a wholly owned subsidiary of Consolidated Companies, Inc. that was formed to facilitate the purchase of STC’s assets. Consolidated owns four Nebraska LECs and an interexchange carrier serving North Central and Southwestern Nebraska. Pursuant to an asset purchase agreement, SCI will purchase all of the operating assets and customer base of STC. STC and Consolidated’s four Nebraska LECs receive high-cost universal service fund support under the Alternative Connect America Cost Model.
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FCC Approves Great Plains Purchase Of Indiana LECs, Subject To USF Conditions
August 28, 2020 – The FCC’s Wireline Competition Bureau has approved, with conditions, the Section 214 application filed by Chad Miles and Great Plains Communications LLC (GP Communications) requesting consent to transfer control of Miles Enterprises, Inc. and its regulated subsidiaries, Miles Communications, Inc., Sunman Telecommunications Corporation, and Sunman Telecommunications Corporation Long Distance from Chad Miles to GP Communications. The conditions are related to the receipt of high-cost universal service fund (USF) support because the parties to the transaction receive USF support under two different mechanisms – the Alternative Connect America Cost Model (A-CAM) and the traditional rate-of-return cost-based support system.
GP Communications, the purchaser, is an incumbent local exchange carrier in Nebraska, and it receives high-cost USF support under the Alternative Connect America Cost Model (A-CAM). GP Communications has three affiliates that also receive A-CAM support. Sunman Telecommunications, a rate-of-return LEC, receives cost-based USF support. The conditions are intended to prevent cost shifting between the companies, from the A-CAM companies to the cost-based company. Such a scenario would boost the cost-based company’s overall costs and overall USF support. To prevent this, the Bureau has capped the combined operating expenses of the post-consummation company’s rate-of-return affiliates at the averaged combined operating expenses of the three calendar years preceding the transaction’s closing date for which the operating expense data are available. The cap will apply to cost recovery under both HCLS and CAF-BLS and will be applied proportionately to each affiliate’s accounts used to determine the affiliate’s eligible operating expense for HCLS and CAF-BLS.
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Mergers & Acquisitions: Douglas Fast Net Acquiring Comspan Communications
August 24, 2020 – The FCC’s Wireline Competition Bureau is seeking comment on a Section 214 application filed by Comspan Communications, Inc. and Douglas Services, Inc., d/b/a Douglas Fast Net (DFN) requesting approval for the transfer of certain assets of Comspan to DFN. Comments are due on or before September 7, 2020. Reply comments are due September 14, 2020.
Comspan, an Oregon corporation, provides competitive local exchange carrier service to 1,343 working lines in the Bandon, Roseburg, Coquille, Glendale, Myrtle Point, and Reedsport exchanges in Oregon. DFN, also an Oregon corporation, provides competitive LEC services to 5,023 working lines in the Roseburg, Camas Valley, Drain, Glide, Yoncalla, Sutherlin, Winston, and Coos Bay exchanges in Oregon. DFN is wholly owned by Douglas Electric Cooperative , an Oregon cooperative corporation.
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Mergers & Acquisitions: Cable One Purchases Ownership Stakes In Wisper Internet & NextLink
August 6, 2020 – Cable One, Inc. has disclosed equity investments in two fixed wireless Internet service providers – NextLink and Wisper Internet. Cable One, made the disclosure as part of its Form 10-Q report to the Securities and Exchange Commission on financial and operating results for the second quarter of 2020. According to the report, in May 2020, Cable One made a $27.2 million minority equity investment in AMG Technology Investment Group, LLC, a fixed wireless provider doing business as NextLink. The report also states that Cable One closed a minority equity investment in Wisper Internet for $25.3 million in July 2020.
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Mergers & Acquisitions: TPG Subsidiary Radiate Holdings Purchasing En-Touch Systems
August 4, 2020 – The FCC’s Wireline Competition Bureau is seeking comment on a Section 214 application filed by ACME Communications, Inc., ETS Telephone Company, Inc., ETS Cablevision, Inc. (the ETS Licensees), and Radiate Holdings, L.P., requesting approval to transfer control of the ETS Licensees from ACME to Radiate. Comments are due on or before August 18, 2020, and reply comments are due August 25, 2020.
ACME is a Texas corporation and investment holding company that owns ETS Telephone and ETS Cablevision. ETS Telephone is a Texas-based provider of competitive local and long distance telephone services to residential and business customers in communities in the general Houston, Texas area. ETS Cablevision is a wholly-owned subsidiary of ETS Telephone that provides cable TV, VoIP, and domestic long distance services to customers in communities in the general Houston, Texas area. Both ETS Telephone and ETS Cablevision market their services under the d/b/a En-Touch Systems.
Radiate, a Delaware limited partnership, is a holding company that is majority owned and controlled by certain investment funds ultimately controlled by the principals of TPG Global, LLC. TPG describes itself as a leading global alternative asset firm with approximately $72 billion of assets under management. TPG also controls the RCN Telecom Services entities, Grande Communications Networks, LLC, and Wave Division Holdings, LLC, which, as of February 27, 2020, have over 990,000 customers and provide high-speed internet, cable services, digital TV, phone services, and fiber optic solutions.
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