Mergers & Acquisitions: Wisper ISP Founder Reacquiring Sole Control Of Company

December 22, 2022 – The FCC’s Wireline Competition Bureau is seeking public comment on a Section 214 application filed by Cable One, Inc., Stephens Wisper, LLC, Wisper ISP, LLC, and Nathan T. Stooke, requesting consent to transfer a controlling interest in Wisper ISP to Mr. Stooke.[1] Comments are due on or before January 5, 2023. Reply comments are due January 12, 2023.

Wisper ISP, Inc., the predecessor-in-interest to Wisper ISP, LLC, was formed in Illinois in 2003 by Nathan Stooke, as the sole owner. Since then, Mr. Stooke has served as the company’s President, in charge of day-to-day operations and strategic vision.

In 2020, Wisper ISP, Inc. converted to Wisper ISP, LLC, a Delaware limited liability company, and sold minority interests in the company to: (1) Cable One, Inc. (40.40% ownership), and (2) Stephens Wisper, LLC (18.80% ownership). Mr. Stooke’s ownership interest was reduced to 40.80 percent. According to a second quarter 2020 Form 10-Q filing, Cable One paid $25.3 million for the minority equity investment in Wisper.[2] This transaction valued the company at $62,623,762.

Wisper ISP currently provides fixed wireless or fiber-based broadband and voice services to approximately 19,000 residential and business subscribers in Arkansas, Illinois, Indiana, Kansas, Missouri, and Oklahoma. Wisper ISP won approximately $220 million in Connect America Fund (“CAF”) Phase II auction support in 2018 to deploy service to 80,149 locations in Arkansas, Indiana, Illinois, Kansas, Missouri, and Oklahoma. So far, it has deployed voice and broadband service to more than 40 percent of its CAF-supported locations, and satisfied its requirements to reduce its irrevocable letters of credit by 50 percent. Bidding as a consortium, Wisper ISP and Cable One won Rural Digital Opportunity Fund (RDOF) Phase I reverse auction support in 13 states. Wisper ISP ultimately filed the long-form application for RDO support for 1,151 locations in only three states: Arkansas, Illinois, and Missouri. It was authorized to receive RDOF support in June 2022.

Cable One, Inc. and its subsidiaries provide video, broadband Internet access, and voice services in 24 states. Stephens Wisper, LLC is an Arkansas limited liability company and private equity firm with substantial investments in broadband companies. It is affiliated with Stephens Capital Partners, LLC, an Arkansas limited liability company and investment group based in Arkansas.

Pursuant to the terms of a Membership Interest Redemption Agreement, Cable One and Stephens Wisper will assign and transfer their ownership interests in Wisper ISP, giving Nathan Stooke 100 percent ownership of the company. Bluewater Wisper Ventures LLC, as the agent for lenders and other parties to a loan agreement, will provide or arrange for debt financing for Mr. Stooke to acquire all the ownership interest in Wisper. Remaining loan proceeds will be used to fund accelerated deployment in Wisper’s CAF and RDOF areas. Bluewater Wisper Ventures LLC is owned and controlled by John Gregg and Randall Mays. According to the Section 214 application, the debt financing arrangement may result in Wisper ISP acquiring additional debt, but will not compromise Wisper’s ability to meet its service obligations.

In total, Mr. Stooke is reacquiring 59.2 percent of Wisper ISP. Based on the $62,623,762 valuation of the company from 2020, the transaction amounts to $37 million. However, it’s possible that valuation has increased somewhat in the past two years.

The Wisper Section 214 application has been accepted by the Wireline Competition Bureau for non-streamlined processing, which will allow the Bureau time to sufficiently analyze the exchange and assumption of Universal Service Fund high-cost mechanism obligations.

**********

[1] Domestic Section 214 Application Filed For The Transfer Of Control Of Wisper ISP, LLC To Nathan T. Stooke, Non-Streamlined Pleading Cycle Established, WC Docket No. 22-367, Public Notice, DA 22-1363 (Dec. 22, 2022), https://docs.fcc.gov/public/attachments/DA-22-1363A1.pdf; Cable One, Inc. and Stephens Wisper LLC (Transferors), Wisper ISP, LLC (Licensee), and Nathan T. Stooke (Transferee), Application For Transfer Of Control Of Domestic Section 214 Authorization, WC Docket No. 22-367 (filed Oct. 14, 2022), https://www.fcc.gov/ecfs/document/10141659822405/1.

[2] See Cable One, Inc., Form 10-Q, For the quarterly period ended June 30, 2020, U.S. Securities and Exchange Commission (Aug. 7, 2020) (Cable One 10-Q), http://ir.cableone.net/Docs; Cable One Invests In Two Fixed Wireless ISPs, LightReading.com (Aug. 6, 2020), https://www.lightreading.com/services/cable-one-invests-in-two-fixed-wireless-isps-/d/d-id/763035.