Recent Mergers & Acquisitions In The Telecommunications Industry
Mergers & Acquisitions: ATN Purchasing Sacred Wind & Operating Companies In New Mexico
August 25, 2022 – The FCC’s Wireline Competition Bureau is seeking public comment on a Section 214 application filed by Sacred Wind Enterprises, Inc. (Sacred Wind) and Alloy, Inc. (Alloy) requesting consent to transfer control of Sacred Wind’s wholly-owned operating subsidiaries to Alloy. Comments are due on or before September 8, 2022. Reply comments are due September 15, 2022.
Sacred Wind is a privately-owned, New Mexico-based corporation formed in 2006 to provide, through its operating companies, telephone and broadband services to unserved and underserved homes on the Navajo Reservation and near-Reservation lands in New Mexico, as well as to Navajo schools, businesses, and government locations, such as local Navajo Chapter houses. Sacred Wind’s operating companies – the subsidiary Section 214 Holders – are Sacred Wind Enterprises, Inc. (SWC), SW DinehNet, LLC (SW DinehNet), and SWC Telesolutions, Inc. (SWC Telesolutions).
SWC is a rural incumbent local exchange carrier (LEC) and Eligible Telecommunications Carrier (ETC) serving a population of approximately 23,300 customers, 98% of whom are Navajo citizens, in an area comprising approximately 3,200 square miles. SW DinehNet is a subsidiary of SWC, an ETC, and provides competitive telecommunications and broadband services outside of SWC’s incumbent LEC territory. SW DinehNet receives Connect America Fund Phase II support in New Mexico, and has been authorized to receive $2.598 million in Rural Digital Opportunity Fund support to serve 635 locations in New Mexico. SWC Telesolutions provides interexchange services to SWC and SWC DinehNet customers and also provides broadband services in areas adjacent to SWC’s service territory.
Alloy is a Delaware holding corporation that was formed for the purpose of acquiring Sacred Wind and the Section 214 Holders. Alloy is a wholly-owned subsidiary of ATN International, Inc. (ATN), a publicly-traded Delaware corporation. ATN has affiliates that provide incumbent LEC services in the U.S. Virgin Islands and Alaska and competitive LEC, wireless, and broadband services in several states, including New Mexico.
Pursuant to a Stock Purchase Agreement, Alloy will acquire all issued and outstanding shares of Sacred Wind’s common stock, and as a result, indirect control of Sacred Wind’s wholly-owned operating subsidiaries. Immediately prior to the consummation of the transaction, ATN will contribute, via a contribution agreement, all of the issued and outstanding shares held by ATN in each of Commnet Wireless, LLC and Commnet Broadband, LLC, which are wholly owned by ATN. Because ATN will continue to have ultimate control of Commnet after the contribution of Commnet shares, the contribution is a pro forma transaction notice of which will be provided separately pursuant to Section 63.03(d) and Section 623.24(f) of the FCC’s rules. The Section 214 application will be considered on a non-streamlined basis by the FCC because the proposed transaction involves the exchange and assumption of Universal Service Fund high cost mechanism obligations.
Mergers & Acquisitions: Lumen Technologies Announces FCC Has Approved Sale of Lumen ILECs To Brightspeed
August 22, 2022 – Lumen Technologies has announced that the FCC has approved the sale of Lumen’s incumbent local exchange carrier (ILEC) business in 20 states to Brightspeed. The transaction is now expected to close early in the fourth quarter of 2022, following the other remaining customary closing conditions. In August 2021, Lumen announced it had entered into an agreement to sell its ILEC business, including its consumer, small business, wholesale and mostly copper-served enterprise customers and assets, in 20 states to funds managed by affiliates of Apollo Global Management, Inc. for $7.5 billion, including debt assumption of approximately $1.4 billion. The approval announcement contained the following update on Brightspeed’s plans for the business:
Brightspeed plans to make significant investments to build an expanded fiber optics network that will bring fast, reliable internet and Wi-Fi to communities throughout the 20-state footprint it is acquiring. These plans include providing fiber facilities that are expected to reach up to three million homes and businesses over the next five years, including in many rural and suburban locations where fiber and advanced technology have not yet been deployed.
Mergers & Acquisitions: Illinois Fiber Connect, LLC To Become Indirectly Wholly-Owned By Wabash Telephone Cooperative
August 9, 2022 – The FCC’s Wireline Competition Bureau is seeking public comment on a Section 214 application filed by EJ Water Cooperative, Inc. and Independent Telcom Associates, Inc., requesting consent to transfer EJ Water Cooperative’s interest in Illinois Fiber Connect, LLC to Independent Telcom Associates. Comments are due on or before August 23, 2022. Reply comments are due August 30, 2022.
Illinois Fiber Connect is an Eligible Telecommunications Carrier that provides service as a competitive local exchange carrier (LEC) in Cumberland, Effingham, and Shelby counties, in Illinois. It receives Connect America Fund Phase II (Auction 903) support to serve locations in Illinois. Illinois Fiber Connect is currently owned by EJ Water Cooperative (49%), an Illinois-based water company, and Independent Telcom Associates (51%). In addition to owning a 51 percent majority interest, Independent Telcom Associates is the Managing Member of Illinois Fiber Connect.
Independent Telcom Associates is an Illinois corporation wholly-owned by Wabash Telephone Cooperative, Inc. d/b/a Wabash Communications Group. Independent Telcom Associates provides Internet and video services over Wabash Telephone Cooperative’s network.
Wabash Telephone Cooperative is an incumbent LEC serving nine exchanges in Clay, Wayne, Edwards, and Effingham Counties, in Illinois. It is owned by its member-subscribers and no single member-subscriber owns or controls 10% or more of the equity interests of the cooperative.
Pursuant to a Membership Interest Purchase Agreement, Independent Telcom Associates will acquire the remaining 49 percent membership interest of Illinois Fiber Connect from EJ Water Cooperative. Under the terms of the transaction, “the current majority owner will remain the majority owner and continue to be the only entity that exercises control in almost all respects.”
Mergers & Acquisitions: Moss Adams Acquires Alexicon
August 4, 2022 – Accounting and consulting firm Moss Adams has announced it has entered into an agreement to acquire Alexicon, a consulting firm that focuses on rural telecommunications with offices in Colorado Springs, Colorado, and Tulsa, Oklahoma. Alexicon (12 employees) will join Moss Adams, effective September 1, 2022. The firms did not disclose the agreement’s financial terms.
Mergers & Acquisitions: NCP Mercury (Northleaf Capital Group, Ltd.) Acquiring Control of Mercury Wireless Indiana, LLC & Mercury Wireless Kansas, LLC
August 3, 2022 – The FCC’s Wireline Competition Bureau is seeking public comment on a Section 214 filed by Mercury Holdings, Inc. (Transferor), Mercury Wireless Indiana, LLC (MWI), Mercury Wireless Kansas, LLC (MWK, and together with MWI, Licensees), and NCP Mercury AIV LP (NCP Mercury or Transferee) requesting consent to transfer control of MWK and MWI to NCP Mercury. The Application has been accepted for non-streamlined processing because the proposed transaction involves the exchange and assumption of Universal Service Fund high-cost mechanism obligations. Comments are due on or before August 17, 2022, in WC Docket No. 22-279. Reply comments are due August 24, 2022.
In their application, the parties explain that the transaction, occurring at the holding company level, “will promote the public interest by providing additional financial resources and support that will allow [Mercury Wireless Indiana, LLC and Mercury Wireless Kansas, LLC], both of whom receive Phase II support from the Connect America Fund and have been awarded support from the Rural Digital Opportunity Fund, to accelerate their deployment of high-speed broadband services to customers in underserved and rural areas in the Midwest, thereby helping to bridge the digital divide.”
Mercury Holdings, a Kansas corporation, currently holds 92.71% of the equity and voting interests in Mercury Broadband, LLC, a Kansas limited liability company, which is the direct parent and sole member of both Mercury Wireless Indiana, LLC and Mercury Wireless Kansas, LLC.
Mercury Wireless Kansas, LLC currently provides wireless broadband and voice services in Kansas and Missouri. It receives Connect America Fund (CAF) Phase II Auction support in Kansas and Missouri, and was recently authorized to receive $8,228,680.40 in Rural Digital Opportunity Fund (RDOF) Auction support to provide service to 13,450 locations in Kansas, Missouri, and Illinois.
Mercury Wireless Indiana, LLC provides wireless broadband and voice services in Indiana and Michigan. It receives CAF Phase II support in Indiana, Michigan, and Ohio, and was recently authorized to receive $53,493,220.80 in RDOF support to provide service to 109,296 locations in Indiana, Michigan, and Ohio.
NCP Mercury is a Delaware limited partnership that was formed to acquire indirect control of Mercury Wireless Indiana, LLC and Mercury Wireless Kansas, LLC through its direct wholly-owned subsidiary, Mercury TopCo, LLC. NCP Mercury and Mercury TopCo are holding companies and do not hold any FCC licenses or authorizations or provide telecommunications services.
NCP Mercury is ultimately controlled by Northleaf Capital Group, Ltd., “a global private markets investment firm based in Toronto, Canada with US$19 billion of private equity, private credit, and infrastructure capital commitments raised.” Northleaf is controlled (50.1%) by its three founders, Michael W. Flood, Jeffrey E. Pentland, and Stuart D. Waugh, and certain other members of its senior leadership team, who generally vote in a block pursuant to a shareholders’ agreement. Armstrong, L.P., a Canadian entity, holds the remaining 49.9% non-controlling interest in Northleaf.
Pursuant to the terms of a Contribution Agreement, Mercury Holdings will contribute its interest in Mercury Broadband, the direct parent of Mercury Wireless Indiana, LLC and Mercury Wireless Kansas, LLC, to Mercury TopCo in exchange for preferred units in Mercury TopCo. As a result, Mercury TopCo will become the direct parent of Mercury Broadband and the indirect parent of Mercury Wireless Indiana, LLC and Mercury Wireless Kansas, LLC, both of which will remain direct, wholly owned subsidiaries of Mercury Broadband. After that, Mercury Holdings, NCP Mercury, and Mercury TopCo will enter into an Amended and Restated Limited Liability Operating Company Agreement of Mercury TopCo, Inc., pursuant to which NCP Mercury will acquire indirect control of Mercury Broadband (and Mercury Wireless Indiana, LLC and Mercury Wireless Kansas, LLC) by virtue of its control of the board of managers of Mercury TopCo.
Mergers & Acquisitions: Commnet Broadband To Acquire Sacred Wind Enterprises
July 27, 2022 – Commnet Broadband has entered into an agreement to acquire Sacred Wind Enterprises, the largest privately owned broadband company in New Mexico, for roughly $25 million in cash and $32 million in debt. Commnet Broadband is a wholly owned subsidiary of ATN International, Inc. Sacred Wind provides voice and broadband services in New Mexico, with a focus on serving tribal communities. Commnet’s parent company ATN provided the following statement on the deal:
Our Commnet Broadband subsidiary announced separately today, that we entered into an agreement this week to acquire Sacred Wind Enterprises, the largest privately owned broadband company in New Mexico. We view this transaction as a next step in the transformation of Commnet's legacy wholesale roaming business. When complete, the combination will expand our core digital infrastructure footprint, and development pipeline, and increase the scale of our wholesale carrier, residential, and business broadband services in the rural Southwest. We expect to utilize approximately $25.0 million of cash and assume approximately $32.0 million in debt to close the transaction after we have obtained regulatory approvals. We do not expect this business combination to have a meaningful impact on our 2022 operating results, as its closing is currently anticipated to occur in the fourth quarter of this year. On a standalone basis, we expect Sacred Wind Enterprises to generate approximately $10 million of EBITDA in 2022.
Mergers & Acquisitions: Nex-Tech Acquiring Moundridge Telecom Companies
May 25, 2022 – The FCC’s Wireline Competition Bureau is seeking comment on a Section 214 application filed by Emmental, Inc., Moundridge Telephone Company, Moundridge Telecom, Inc., Mid-Kansas Cable Services, Inc. (the Moundridge Companies), and Rural Telephone Service Company, Inc. dba Nex-Tech, requesting approval for the transfer of control of the Moundridge Companies to Nex-Tech. Comments are due June 8, 2022. Reply comments are due June 15, 2022.
Emmental is a holding company that provides telecommunications services through its direct and
indirect wholly-owned subsidiaries, all Kansas corporations. Moundridge Telephone Company, founded in 1904, provides local exchange service and exchange access service as an incumbent local exchange carrier in the Moundridge and Goessel exchanges, which services approximately 2,100 access lines in portions of McPherson, Harvey, and Marion Counties in central Kansas. It wholly owns Moundridge Telecom, Inc., a long-distance toll service reseller providing telecommunications services in Moundridge’s local exchange service area. Mid-Kansas Cable Services, Inc. holds a certificate of convenience and authority from the Kansas Corporation Commission to provide competitive local exchange carrier services. Emmental is also the ultimate parent of two other entities that Nex-Tech “intends to acquire as part of the transaction,” but which are not FCC-regulated entities and hold no FCC authorizations or licenses.
Rural Telephone Service Company, Inc. dba Nex-Tech was organized as a cooperative in 1951, and is headquartered in Lenora, Kansas. It provides voice and broadband services, as well as cloud, managed T.T., security and surveillance, hardware and software, and backup services, itself and through subsidiaries in 39 exchanges. It also owns a 42.75% stake in Nex-Tech Wireless, LLC, a commercial mobile radio service provider.
The companies announced the transaction in April 2022. Pursuant to a stock purchase agreement, Nex-Tech will acquire all of the outstanding common stock of Emmental, making Emmental a direct, wholly-owned subsidiary of Nex-Tech, and the other companies indirect, wholly-owned subsidiaries of Next-Tech. Financial terms were not disclosed. The deal is expected to close in July 2022, subject to state and federal regulatory approval.
Mergers & Acquisitions: Nextlink Internet Acquires Illinois Fixed Wireless Broadband Provider CCAOnline, Inc.
May 2, 2022 – AMG Technology Investment Group LLC d/b/a Nextlink Internet has announced it has acquired CCAOnline, Inc. Terms of the deal were not announced.
Nextlink Internet is a fiber and fixed wireless service provider that delivers high-speed internet and voice services to homes, businesses, health care facilities, schools, and libraries in Texas, Oklahoma, Kansas, Nebraska, Iowa, and Illinois. Nextlink has been a broadband service provider for nearly a decade, beginning its operations in the fall of 2012 in Weatherford, Texas. CCAOnline, Inc., based in Logan and Tazewell Counties, Illinois, is a fixed wireless broadband service provider that has been in business for over 25 years.
In the press release announcing the deal, Bill Baker, CEO of Nextlink Internet, provided the following statement on how Nextlink plans to incorporate and improve CCAOnline’s network:
“We will immediately begin upgrades to the legacy CCA network infrastructure that we’re acquiring today. These upgrades will bring download speeds to at least 100 Mbps across Logan County and in many areas, we will be offering up to 400 Mbps download speed plans. As the presumptive winner of over $4 million in Rural Digital Opportunity Funding (RDOF) for Logan County, we plan to significantly improve the broadband capabilities of Logan County residents.”
Mergers & Acquisitions: Boulevard Digital (Alinda Holdings) Acquiring Consolidated Communications Enterprise Services’ Kansas City Customers And Assets
April 20, 2022 – The FCC’s Wireline Competition Bureau is seeking public comment on a Section 214 application filed by Consolidated Communications Holdings, Inc., Consolidated Communications Enterprise Services Inc. (CCES), and Boulevard Digital LLC (Boulevard Digital) requesting approval for the acquisition of certain customers and assets of CCES in Kansas and Missouri within the Kansas City metropolitan area and surrounding counties and municipalities by Boulevard Digital. Comments are due on or before May 4, 2022. Reply comments are due May 11, 2022.
CCES is a Delaware corporation that is ultimately controlled by Consolidated Communications Holdings. In the Kansas City market, CCES provides competitive telecommunications services to approximately 19,000 consumer voice subscribers, 13,000 consumer broadband subscribers, and 1,900 commercial subscribers, utilizing approximately 1,230 fiber route miles. CCES’ Kansas City business serves the following Kansas municipalities: Fairway, Kansas City, Leawood, Lenexa, Merriam, Mission Hills, Mission Woods, Olathe, Overland Park, Prairie Village, Roeland Park, Shawnee, Westwood, and Westwood Hills. In Missouri, it serves Kansas City, Lee’s Summit, and North Kansas City.
Boulevard Digital is a Delaware limited liability company that was formed for the specific purpose of acquiring the CCES assets. Boulevard Digital is owned by various limited partnerships managed by and controlled by Alinda Holdings, LLC, a Delaware limited liability company and investment entity.
FCC Issues Guidance On Mergers & Acquisitions Involving High-Cost USF Support Obligations
April 19, 2022 – The FCC’s Wireline Competition Bureau has issued guidance on “domestic section 214 applications seeking approval for transactions that involve the exchange and assumption of Universal Service Fund (USF) high-cost mechanism obligations.” Specifically, the Bureau recommends that for such transactions, the applicants include the following in the initial public interest section of their applications:
A listing of all USF high-cost support received by each entity to be transferred and by the transferee and each affiliate of the transferee, including Connect America Fund (CAF) Phase II Auction (Auction 903) support, Rural Digital Opportunity Fund (RDOF) Phase I Auction (Auction 904) support, Alaska Plan support, Alternative Connect America Cost Model support, CAF Broadband Loop Support, and Rural Broadband Experiment support.
Confirmation of whether the entity or entities to be transferred are Eligible Telecommunications Carriers (ETC) under section 214(e) of the Act.
If the entity or entities to be transferred have been awarded CAF Phase II or RDOF funding, provide a summary addressing any changes to management, technology, or debt that would result from the proposed transaction, as well as whether there are any changes that might occur that would compromise the support recipients’ ability to meet their service obligations.
A list of study area codes (SACs) for each entity to be transferred and for each affiliate of the entity or entities to be transferred, and for the transferee and each affiliate of the transferee.
A confirmation of whether the entity or entities to be transferred participate in the Lifeline program, Emergency Broadband Benefit program, or the Affordable Connectivity Program, and whether such participation will continue if the transaction is consummated.
Mergers & Acquisitions: Nex-Tech To Acquire Moundridge Communications Network
April 15, 2022 – Rural Telephone Service Company, Inc. d/b/a Nex-Tech, a Kansas incumbent local exchange carrier, has announced it has reached an agreement to acquire The Moundridge Telephone Company Inc. d/b/a Moundridge Communications Network. Terms have not been disclosed. The deal is expected to close by July 2022, subject to state and federal regulatory approval.
Nex-Tech is organized as a cooperative and headquartered in Lenora, Kansas. It provides voice and broadband services, as well as cloud, managed T.T., security and surveillance, hardware and software, and backup services, itself and through subsidiaries.
Moundridge Communications Network is a family-owned and operated communications service provider that was founded in 1904 in Moundridge, Kansas. It provides broadband Internet access and telephone services to customers in the Kansas communities of Moundridge and Goessel. The current owners acquired the company in 2016.
Mergers & Acquisitions: Mesa Telecoms Investments Acquiring Dobson Fiber And Wholly-Owned Subsidiaries
March 21, 2022 – The FCC’s Wireline Competition Bureau is seeking comment on a Section 214 Application filed by Dobson CC Limited Partnership (DLP – the Transferor) and Mesa Telecoms Investments, LLC (the Transferee). The application requests FCC consent for the indirect transfer of control of Dobson Technologies, Inc. d/b/a Dobson Fiber and its wholly-owned subsidiaries, from DLP to Mesa Telecoms. Comments on the Section 214 application are due on or before April 4, 2022. Reply comments are due April 11, 2022.
In February 2022, DLP and Mesa Telecoms entered into a stock purchase agreement and related agreements whereby Mesa Telecoms will acquire 100% of the direct ownership interests in Dobson Fiber. The applicants “fully anticipate that Dobson Fiber’s existing management team will largely remain in place, and coupled with the financial resources and management and operational expertise of Transferee, will bring substantial benefits to customers.”
Dobson Fiber, based in Oklahoma, is a privately-owned company that holds ownership of various companies operating as ILECs and CLECs in Oklahoma, Arkansas, and Texas. Dobson Fiber’s wholly owned subsidiaries include Dobson Telephone Company, Inc., Dobson Technologies – Transport and Telecom Solutions, LLC, Lavaca Telephone Company, Inc., Pinnacle Telecom L.L.C., and Vantage Telecom, LLC. Dobson Telephone Company receives Alternative Connect America Cost Model support, while Lavaca receives cost-based CAF-BLS support. Through its subsidiaries, Dobson Fiber owns and operates a 4,900-mile fiber optic network in Arkansas, Oklahoma and Texas, and provides connectivity services to businesses, carriers and other wholesale providers. DLP will continue to participate in the ownership of Dobson Fiber through an indirect minority interest in Mesa Telecoms.
Mesa Telecoms is a newly formed Delaware limited liability company created as a holding entity for the transaction, and is an indirect subsidiary of Mesa Telecoms Holdings, L.P., a Delaware limited partnership. Ultimately, Mesa Telecoms is an indirect subsidiary of iCON Infrastructure Partners V, L.P. and iCON Infrastructure Partners V-B, L.P, which make up the iCON V Fund, “an infrastructure investment fund established in March 2020, focused on acquiring and managing a diversified range of infrastructure assets in Europe and North America.”
Mergers & Acquisitions: Goldman Sachs Purchasing ImOn Communications
February 17, 2022 – Global investment firm Goldman Sachs has entered into an agreement to purchase ImOn Communications, a communications service provider based in Cedar Rapids, Iowa. Goldman Sachs’s asset management division is making the acquisition. ImOn was originally created as a cable TV provider, but today operates a fiber-to-the-premises network that covers over 60,000 homes and businesses in Cedar Rapids, Marion, Hiawatha, Iowa City, and Dubuque, Iowa. The parties have not disclosed the purchase price or other financial terms of the agreement.
