Recent Mergers & Acquisitions In The Telecommunications Industry
Mergers & Acquisitions: Mutual Telephone Company of Sioux Center, Iowa d/b/a Premier Communications Acquiring Royal Telephone Company of Iowa
November 17, 2023 – The FCC’s Wireline Competition Bureau is seeking comment on a Section 214 application filed by Royal Telephone Company and Mutual Telephone Company of Sioux Center, Iowa d/b/a Premier Communications, requesting approval for the transfer of control of Royal to Premier through a merger transaction by which Noble Acquisition, Inc. will be merged with and into Royal, with Royal surviving that merger. Both companies hold blanket domestic Section 214 authorizations under section 63.01 of the FCC’s rules. Comments are due on or before December 1, 2023. Reply comments are due December 8, 2023.
Royal Telephone Company is an Iowa rural incumbent local exchange carrier (LEC) that provides local and long-distance telecommunications, high-speed Internet access, and access services to roughly 300 residential and business customers in the Royal, Iowa exchange. Royal currently receives Connect America Fund (CAF) Broadband Loop support and high-cost loop support, but has elected to receive Enhanced Alternative Connect America Cost Model (A-CAM) support beginning January 1, 2024. No person owns a 10% or greater interest in Royal.
Premier Communications is an Iowa rural incumbent LEC that currently provides local exchange telecommunications service, access service, Internet, and advanced communications services to approximately 3,500 customers in the Sioux Center, Iowa exchange. Premier wholly owns several incumbent LEC and competitive LEC affiliate providers of local exchange service in the state of Iowa. No person owns a 10% or greater interest in Premier.
Pursuant to an Agreement and Plan of Merger, Premier Communications will acquire all or substantially all telecommunications operations and assets, property, rights, and interest from Royal to provide broadband and other communications services in and around Royal, Iowa. Upon completion of the transaction, services will be provided by Royal as a wholly-owned subsidiary of Premier Communications. The Section 214 application has been accepted for non-streamlined processing because of the complexity of the proposed transaction.
Mergers & Acquisitions: Macquarie Infrastructure Acquiring Control Of CableSouth Media III, LLC d/b/a Swyft Fiber
November 16, 2023 – The FCC’s Wireline Competition Bureau is seeking comment on a Section 214 transfer of control application filed by Hunt Group Holdings, LLC, ITC Holdings, LLC, CableSouth Media III, LLC d/b/a Swyft Fiber (CableSouth), and MIP VI Outlier, LLC, requesting consent to transfer control of CableSouth to MIP VI Outlier. Comments are due on or before November 30, 2023. Reply comments are due December 7, 2023.
CableSouth, a Tennessee LLC, primarily provides broadband, video, and interconnected VoIP services to residential customers throughout the Southeastern U.S., using the brand names “SwyftConnect” and “Swyft Fiber.” It was awarded $152.9 million in Rural Digital Opportunity Fund (RDOF) support to deploy fiber-to-the-home broadband service to 57,387 locations across Arkansas, Louisiana, and Mississippi.
CableSouth is ultimately wholly owned by CSM Holding Company, LLC (CSM Holding). Hunt Group Holdings, a Louisiana LLC, currently owns 65% of the equity in CSM Holding, while ITC Holdings, a Delaware LLC, owns the remaining 35 percent. Hunt Group has the right to appoint four of the six managers on the board of CSM Holding, with ITC Holdings appointing two. ITC Holdings has veto rights over certain business decisions and activities of CableSouth that, coupled with its ownership stake, provides ITC Holdings with a de facto controlling interest in CableSouth.
MIP VI Outlier, LLC is indirectly owned by investment vehicles managed by or affiliated with Macquarie Infrastructure Partners Inc. (MIP Inc.), which is a wholly-owned subsidiary of Macquarie Infrastructure and Real Assets Inc. (MIRA Inc.). MIRA Inc. is a wholly-owned subsidiary of Macquarie Holdings (U.S.A.) Inc., which is held by various intermediate Australian entities ultimately held by Macquarie Group Limited (MGL), a publicly traded company incorporated in Australia.
Pursuant to a membership interest purchase agreement, MIP VI Outlier will acquire at least 50% of the equity value of CSM Holding, which MIP VI Outlier will purchase directly from CSM Holding. Also, MIP VI Outlier will acquire 50 percent of the voting and certain approval rights. More specifically, when the deal closes, MIP VI Outlier will have the right to appoint four of the eight managers to the board of managers of CSM Holding, with the other four appointed by Hunt Group. Thus, at closing, MIP VI Outlier and Hunt Group will each have a 50% voting interest in CSM Holding, and ITC Holdings will no longer have any interest in either CSM Holding or CableSouth.
Mergers & Acquisitions: Premier Communications Acquiring Infrastructure & Customers In Iowa Great Lakes Area From IGL Teleconnect
November 14, 2023 – The FCC’s Wireline Competition Bureau is seeking comment on a Section 214 application filed by Great Lakes Communication Corp. d/b/a IGL Teleconnect (GLCC) and Mutual Telephone Company of Sioux Center, Iowa d/b/a Premier Communications (Premier Communications), requesting consent for the acquisition of certain assets of GLCC by Mutual. Comments are due on or before November 28, 2023. Reply comments are due December 5, 2023.
GLCC is an Iowa corporation that provides service as a competitive local exchange carrier (LEC) to approximately 2,700 residential and business customers in the rural exchanges of Milford, Lake Park, and Spencer, Iowa. It also provides Internet services in the counties of Buena Vista, Clay, Dickinson, Emmet, and Osceola, Iowa.
Premier Communications is an Iowa corporation that provides service as a rural incumbent LEC to approximately 3,500 customers in the Sioux Center, Iowa exchange. Premier Communications wholly owns the following incumbent LEC and competitive LEC providers of local exchange service: Northern Iowa Telephone Company, an incumbent LEC providing service in the exchanges of Hinton, Matlock, Maurice, Sanborn, Little Rock, and Granville, Iowa; Webb Dickens Telephone Corporation, an incumbent LEC providing service in the exchanges of Dickens and Webb, Iowa; Heartland Telecommunications Company of Iowa, an incumbent LEC providing service in the exchanges of Akron, Boyden, Doon, Hawarden Hull, Ireton, Rock Rapids, Rock Valley, and Sibley, Iowa, the exchange of North Rock Rapids, Minnesota, and the exchanges of West Akron and West Hawarden, South Dakota; and Premier Communications, Inc., a competitive LEC providing service in the exchanges of Akron, Ashton, Boyden, Doon, Hull, Ireton, Rock Valley, Rock Rapids, LeMars, Ocheyedan, Orange City, George, Merrill, Arnolds Park, Lake Park, Milford, Sheldon, and Spirit Lake, Iowa.
Pursuant to an asset purchase agreement, Premier Communications will acquire from GLCC fixed wireless and fiber-based broadband and telecommunications retail assets, property, rights, and interests (including all customer contracts and customer relationships) used to provide Internet, telephone, video, and other communications services in and around the Iowa Great Lakes area. Upon completion of the transaction, these communications services will be provided by Premier. The application has been accepted for streamlined treatment by the Bureau.
Mergers & Acquisitions: H.N.G. Holdings Acquiring Campti-Pleasant Hill Telephone Co. & CP-TEL Network Services From Epic Touch
November 8, 2023 – The FCC’s Wireline Competition Bureau is seeking comment on a Section 214 application filed by Epic Touch Co., Inc. and H.N.G. Holdings, L.L.C., requesting consent to transfer control of CP-TEL Holdings, Inc. and its wholly-owned subsidiaries Campti-Pleasant Hill Telephone Co., Inc. and CP-TEL Network Services, Inc., from Epic Touch to HNG Holdings. Comments are due on or before November 22, 2023. Reply comments are due November 29, 2023.
Epic Touch, a holding company incorporated in Kansas, owns and operates the following entities: (1) the Elkhart Telephone Company, a Kansas rural ILEC; and (2) CP TEL Holdings, Inc., a Louisiana holding company. CP Tel Holdings wholly owns the following entities: (a) Campi-Pleasant Hill, a Louisiana corporation and rural LEC that provides local exchange and exchange access services in portions of the Natchitoches, Sabine, DeSoto, and Red River Parishes in northwestern Louisiana; and (b) CP-TEL Network Services, Inc, a Louisiana competitive LEC serving portions of Natchitoches, Sabine, DeSoto, and Red River Parishes in northwestern Louisiana.
H.N.G. Holdings, L.L.C., is a Louisiana holding company that wholly owns: (1) Northeast Louisiana Telephone Company, Inc., a Louisiana rural LEC; and (2) Northeast Long Distance, LLC, a Louisiana limited liability company that provides long distance toll services in Morehouse and Ouachita Parishes. Northeast Louisiana Telephone wholly owns Northeast Telephone Services, Inc., a Louisiana corporation that provides competitive LEC and other services in portions of Morehouse and Ouachita Parishes in northeastern Louisiana.
Pursuant to the terms of the proposed transaction, H.N.G. Holdings will purchase from Epic Touch all of the issued and outstanding stock of CP TEL Holdings. As a result, H.N.G. Holdings will indirectly wholly own Campti-Pleasant Hill and CPTN. Due to the complexity of the transaction, the Wireline Bureau has accepted the Section 214 application for non-streamlined processing.
Mergers & Acquisition: DISH Network Selling Spectrum & Prepaid Subscribers In Puerto Rico And U.S. Virgin Islands To Liberty Latin America
November 6, 2023 – Liberty Latin America Ltd. has entered into an agreement with DISH Network to acquire DISH spectrum assets in Puerto Rico and the United States Virgin Islands, as well as approximately 120,000 prepaid mobile subscribers in those markets in exchange for cash and international roaming credits. Liberty Latin America’s aggregate asset purchase price is $256 million, which will be paid in four annual installments. The transaction is subject to closing conditions and regulatory approvals, and is expected to close in 2024.
Mergers & Acquisitions: Disney Purchasing Remaining Stake In Hulu From Comcast
November 1, 2023 – The Walt Disney Company has announced it will acquire the remaining 33% stake in Hulu, LLC held by Comcast Corporation. Comcast triggered the deal following its “November 1 exercise of its right under the put/call arrangement between the two companies.” Disney expects to pay at least $8.61 billion to gain full control of Hulu. Disney provided the following details in its announcement of the acquisition:
Under the terms of the put/call arrangement, by December 1, Disney expects it will pay NBCU approximately $8.61 billion, representing NBCU’s percentage of the $27.5 billion guaranteed floor value for Hulu that was set when the companies entered into their agreement in 2019 minus the anticipated outstanding capital call contributions payable by NBCU to Disney. Under the appraisal process agreed to by Disney and Comcast, Hulu’s equity fair value will be assessed as of September 30, 2023, and if the value is ultimately determined to be greater than the guaranteed floor value, Disney will pay NBCU its percentage of the difference between the equity fair value and the guaranteed floor value. While the timing of the appraisal process is uncertain, we anticipate it should be completed during the 2024 calendar year.
Mergers & Acquisitions: Shentel Acquiring Horizon Companies Of Ohio
October 24, 2023 – Shenandoah Telecommunications Company has announced it has entered into an agreement to acquire 100% of the equity interests in Horizon Acquisition Parent LLC for $385 million, which consists of $305 million in cash and $80 million of Shentel common stock. Horizon Acquisition Parent LLC is the parent company of two wholly-owned subsidiaries that hold domestic Section 214 authorizations: The Chillicothe Telephone Company and Horizon Technology, Inc. The press release announcing the transaction provides the following information on Horizon’s operations:
Horizon is a leading commercial fiber provider in Ohio and adjacent states serving national wireless providers, carriers, enterprises, and government, education and healthcare customers. Horizon’s unique 7,200 route-mile fiber network is the largest and most dense network across its footprint with over 9,000 on-net locations. Approximately 64% of Horizon’s revenues are derived from their commercial customers. Based in Chillicothe, Ohio, Horizon was founded in 1895 as the incumbent local exchange carrier (“ILEC”) in Ross County, Ohio and rapidly expanded its fiber network over the past 14 years. Most recently, Horizon has pursued a strategy of investing in Fiber-to-the-Home (“FTTH”) in tier 3 & 4 markets in Ohio and currently passes 14,000 homes and businesses with fiber in its ILEC market and 18,000 homes in new, greenfield markets adjacent to its commercial fiber network.
Mergers & Acquisitions: T-Mobile Enters Into Lease-To-Buy Deal For Comcast 600 MHz Spectrum Licenses
September 12, 2023 – T-Mobile has entered into an agreement with Comcast to lease Comcast’s 600 MHz spectrum licenses and eventually acquire those licenses. Pursuant to a License Purchase Agreement, T-Mobile will acquire the 600 MHz band licenses from Comcast in exchange for total cash consideration of between $1.2 billion and $3.3 billion. The parties expect to make the requisite FCC spectrum license transfer filings in the first half of 2027, with a closing in the first half of 2028. T-Mobile’s 8-K notice filing to the Securities and Exchange Commission provides the following additional details about the transaction:
The final Purchase Price will be determined, in the aggregate and on a per License basis, based on the set of Licenses subject to the License Purchase Agreement at the time the parties make required transfer filings with the FCC. Prior to the time of such filings, Comcast has the right to remove any or all of a certain specified subset of the Licenses (the “Optional Sale Licenses”) from the License Purchase Agreement. The removal of any Optional Sale Licenses would reduce from $3.3 billion the final Purchase Price by the assigned value of each such License.
The Licenses are being acquired without any associated network, but the Licenses will be subject to a T-Mobile exclusive leasing arrangement entered into contemporaneously with the License Purchase Agreement. If Comcast elects to remove an Optional Sale License from the License Purchase Agreement, the associated lease for such Optional Sale License will terminate, but no sooner than two years from the date of the License Purchase Agreement (with T-Mobile having a minimum period of time after any such termination to cease transmitting on such License’s associated spectrum).
The geographic areas covered by the Licenses that may not be removed from the License Purchase Agreement include markets covering approximately 39 million pops, including New York, New York; Orlando, Florida; Kansas City, Missouri; and other markets. The geographic areas covered by the Optional Sale Licenses include markets covering approximately 110 million pops, including Chicago, Illinois; San Francisco, California; Baltimore, Maryland / Washington D.C.; Boston, Massachusetts; Miami, Florida; Nashville, Tennessee; and other markets. Each market’s License covers 10MHz, except for Nashville, Tennessee, which covers 20MHz.
Mergers & Acquisitions: Communications Network, Inc. Acquiring Farmers & Merchants Mutual Telephone Company of Wayland, Iowa
August 17, 2023 – The FCC’s Wireline Competition Bureau is seeking comment on a Section 214 transfer of control application filed by The Farmers & Merchants Mutual Telephone Company of Wayland, Iowa (Farmers) and Communications Network, Inc. (CNI), requesting consent to transfer control of Farmers to CNI. Comments are due on or before August 31, 2023. Reply comments are due September 7, 2023.
Farmers is a privately held Iowa corporation that provides telecommunications services as an incumbent local exchange carrier in Iowa. Farmers receives high-cost universal service fund (USF) support through Connect American Fund Broadband Loop Support (CAF BLS), Connect America Fund Intercarrier Compensation (CAF-ICC) support, and High-Cost Loop Support (HCLS).
CNI is an Iowa corporation that provides wireless telecommunications services in Iowa. CNI is a wholly-owned subsidiary of Kalona Cooperative Telephone Company (KCTC), an Iowa cooperative association that provides local exchange service and other services in Iowa. CNI does not receive any USF high-cost support. CNI’s parent company, KCTC, receives CAF BLS, CAF-ICC support, and HCLS.
Pursuant to a reverse triangular merger, outstanding shares of Farmers stock will be converted into the right to receive a cash amount per share, and outstanding shares of Merger Sub, a wholly-owned subsidiary of CNI created for the purposes of the transaction, will be converted into shares of Farmers. Thereafter, Merger Sub will cease to exist and Farmers will remain in existence as a wholly-owned subsidiary of CNI.
Mergers & Acquisitions: LICT To Spin Off Michigan Broadband
August 2, 2023 – LICT Corporation has announced the approval of its previous decision to spin off the company’s wholly-owned subsidiary Michigan Broadband. The separation will be effectuated through a pro-rata distribution of stock in the new company MachTen, Inc. Thereafter, “LICT and MachTen will be independent, publicly traded companies with distinct business operations, customers and geographic markets.”
Mergers & Acquisitions: GigFire Acquires Rural Comm In Illinois
July 7, 2023 – GigFire (formerly known as LTD Broadband) has announced it has acquired Rural Comm, a communications services provided located in Farina, IL. GigFire operates in ten states, primarily in the Midwest region of the U.S. With its acquisition of Rural Comm, “GigFire will build fiber to the home in over 150 towns and cities in Illinois and upgrade the existing network infrastructure to deliver gigabit speeds.” Terms of the deal were not disclosed.
Mergers & Acquisitions: Abu Dhabi sovereign Wealth Fund Invests $500 Million In Brightspeed
May 2, 2023 – The Abu Dhabi sovereign investor, Mubadala Investment Company, has announced it is investing US $500 million in Brightspeed. Mubadala Investment Company is now a minority owner. Brightspeed is majority owned by Apollo Global Management. Brightspeed is the fifth-largest incumbent local exchange carrier in the U.S., serving rural and suburban communities in Pennsylvania, New Jersey, and the U.S. Midwest and Southeast. In 2022, Brightspeed acquired Lumen Technologies’ ILEC businesses in 20 states.
Mergers & Acquisitions: Yellowhammer Networks Acquiring BroadLife Communications’ Alabama RDOF Support & Obligations
April 7, 2023 – The FCC’s Wireline Competition Bureau is seeking public comment on s Section 214 application filed by BroadLife Communications, Inc. and Yellowhammer Networks, LLC requesting consent for the transfer of certain assets from BroadLife to Yellowhammer. The transaction involves the assignment and Yellowhammer’s assumption of BroadLife’s Rural Digital Opportunity Fund (RDOF) support obligations in certain Alabama census blocks and right to receive corresponding RDOF support. Additionally, the Bureau is seeking comment on Yellowhammer’s petition for designation as an eligible telecommunications carrier in census blocks in Alabama where BroadLife is authorized to receive RDOF support. Comments are due on or before April 21, 2023, and reply comments are due April 28, 2023. Comments on the transfer of control application must reference WC Docket No. 23-23. Pleadings for the ETC Petition must reference WC Docket Nos. 09-197 and 23-23.
BroadLife, a Delaware corporation, describes itself as a “developer and potential provider of broadband Internet access service over fiber-based networks.” BroadLife is an ETC that is authorized to receive $26,461,542 in RDOF support over ten years to provide service to 7,483 locations in Alabama. However, BroadLife does not currently offer any telecommunications services in the RDOF census blocks.
Yellowhammer is a Delaware limited liability company. Yellowhammer and its affiliates are infrastructure development companies that do not currently offer domestic telecommunications services. Yellowhammer is held by private equity funds Meridiam Infrastructure North America Fund III, LP and its parallel funds (collectively, Meridiam Fund III), and thus held indirectly through limited partnership and limited liability company interests by numerous investors. Meridiam Fund III and all its subsidiaries, including Yellowhammer, are managed by Meridiam Infrastructure North America Corporation, a Delaware corporation. Yellowhammer is ultimately controlled Thierry Déau, the President of Meridiam, a citizen of France.
Pursuant to an Assignment and Assumption Agreement, and subject to FCC consent of the Section 214 application and the Yellowhammer ETC Petition, BroadLife has agreed to assign to Yellowhammer:
RDOF support that BroadLife has received and will have received prior to the consummation of the transaction, net of state and federal income taxes owed on RDOF support BroadLife received in 2022;
BroadLife’s entitlement to receipts of all future RDOF support; and
All of BroadLife’s obligations associated with the receipt of RDOF support for the Alabama RDOF locations.
The proposed transaction would involve the exchange and assumption of Universal Service Fund high-cost mechanism obligations. As a result, the parties’ Section 214 application has been accepted for non-streamlined processing in order for the Wireline Bureau to sufficiently analyze whether the parties’ proposed transaction would serve the public interest. Additional information is available from the Bureau’s Public Notice and the parties’ Section 214 application and supplement.
Mergers & Acquisitions: Australian Infrastructure Fund Purchasing Rainier Connect
February 24, 2023 – The FCC’s Wireline Competition Bureau is seeking public comment on a Section 214 application filed by Mashell, Inc., Mashell Telecom, Inc. d/b/a Rainier Connect, and Alphaboost Purchaser, LLC, requesting consent to transfer control of Mashell Telecom to Alphaboost. Comments are due on or before March 10, 2023. Reply comments are due March 17, 2023.
Mashell, Inc. is a Washington corporation that acts as a holding company for Mashell Telecom and its affiliates, which collectively provide telecommunications services to approximately 25,000 residential customers and approximately 2,200 commercial customers in the state of Washington. Mashell Telecom is an eligible telecommunications carrier (ETC) and incumbent local exchange carrier (LEC) that provides telecommunications services in Washington.
Alphaboost is a Delaware limited liability company that was recently created to carry out the transaction. Alphaboost is indirectly owned by Palisade Diversified Infrastructure Fund No. 3, an Australian infrastructure fund. When the deal closes, Mashell Telecom will be an indirect, wholly-owned subsidiary of Alphaboost. Ultimately, though, Mashell Telecom will be owned directly or indirectly by funds managed by Palisade Americas Management, LLC (PAM) and Palisade Investment Partners Limited (PIPL), an Australia specialist infrastructure investment manager.
The Section 214 application is not subject streamlined treatment, and has been referred 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.
Mergers & Acquisitions: GI Partners Acquires Rise Broadband
February 2, 2023 – Private equity firm GI Partners has acquired Rise Broadband, a fixed wireless broadband provider. The deal’s financial terms were not disclosed. Rise Broadband provides fixed wireless and fiber-based broadband services in 16 states. GI Partners is a private equity firm with $35 billion in assets under management
Mergers & Acquisitions: Nextlink Internet Acquires Bluestem Network Assets
February 1, 2023 – Nextlink Internet has announced it has acquired most of the assets of Bluestem Network, based in Lancaster and Seward Counties in Nebraska. Nextlink Internet is a rural-focused provider of high-speed internet and phone services, investing over $1 billion in unserved and underserved communities with its fiber and wireless infrastructure. Bluestem Network is a local fiber-to-the-home internet and phone service provider, with service in small communities across southeast Nebraska.
Mergers & Acquisitions: Stonepeak Completes Purchase Of Intrado’s Safety Business
February 1, 2023 – Stonepeak has announced that it has completed its acquisition of Intrado Corporation’s Life & Safety business. The $2.4 billion deal was announced in September 2022. Stonepeak is a leading alternative investment firm specializing in infrastructure and real assets with approximately $53.4 billion of assets under management. Intrado is a leading provider of 911 technology solutions for traditional phone companies, wireless carriers, satellite and cable operators, VoIP providers, and public safety and government agencies across North America.
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. 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.
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.
The 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.
Mergers & Acquisitions: Private Equity Acquiring Control Of Kansas Broadband Provider Ideatek Telcom, LLC
December 9, 2022 – The FCC’s Wireline Competition Bureau is seeking public comment on a Section 214 application filed by Daniel P. Friesen and IdeaTek Telcom, LLC, requesting consent to transfer control of IdeaTek.
The transaction triggering the transfer of control involves Peppertree Capital Fund IX QP, LP’s conversion of a prior significant debt investment into equity ownership. Peppertree Capital Fund IX will acquire 47.3% of the membership units of IdeaTek, resulting in the majority member, Mr. Friesen, being reduced to a 24.46% ownership of the company. Comments are due on or before December 23, 2022. Reply comments are due December 30, 2022.
IdeaTek, a Kansas LLC and Kansas CLEC, provides competitive voice and broadband services via fiber and fixed wireless to approximately 15,000 subscribers in Kansas. IdeaTek has been designated as an eligible telecommunications carrier (ETC) in areas where it receives Connect America Fund (CAF) Phase II support (6,186,881.60 to serve 2,490 locations in Kansas) and Rural Digital Opportunity Fund (RDOF) Phase I support ($23,590.60 to serve 89 locations in Kansas). IdeaTek has completed its CAF Phase II network deployment to 76% of the 2,490 required locations.
Daniel Friesen, a U.S. citizen, currently owns 51.25% of IdeaTek through IdeaTek Equity Group, LLC and 1.96% individually (53.21% total). He is the sole manager of the LLC. Jerrod Reimer, a U.S. citizen, owns 13.15% of IdeaTek through IdeaTek Equity Group and 0.38% individually (13.54% total).
Pursuant to a Convertible Secured Promissory Note and a Convertible Note Purchase Agreement, Peppertree Capital Fund IX, LP, a Delaware limited partnership, Peppertree Capital Fund IX QP, LP, a Delaware limited partnership, and Peppertree Capital FIX Co-Investors, LLC, an Ohio limited liability company, made a significant debt investment in IdeaTek and acquired the right to convert its debt into ownership of up to a total of 49.5% in IdeaTek, subject to FCC prior consent to a transfer of control of IdeaTek’s domestic Section 214 authorization and wireless licenses. The Peppertree Funds are managed by Peppertree Capital Management, Inc., an Ohio corporation.
Upon consummation, the Convertible Note will convert to equity in IdeaTek, and Mr. Friesen’s ownership interest in IdeaTek will be reduced from 53.21% to 24.46% – triggering a transfer of control of IdeaTek under the FCC’s rules. Mr. Reimer’s interest will fall below 10%. Once the transaction goes through, company management will change. After consummation, the company will be managed by a five-person board consisting of Mr. Friesen, Mr. Reimer, and Mr. Daniel Solomon, the company’s CFO, along with two members appointed by Peppertree Capital Management.
