HickoryTech bulks up fiber assets with IdeaOne acquisition

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The deal: Brainerd, Minn.-based telco HickoryTech is riding the broadband stimulus wave. But it's not depending on the government-funded fiber buildout from Brainerd to Fargo, N.D. to assure its future success. Instead, it announced, in Dec. 2011, that it was buying metro fiber provider IdeaOne for $28 million.

HickoryTech already had a presence in the Fargo area through its subsidiary, Enventis, which provides business-to-business connectivity. IdeaOne had 1,900 business customers, 1,700 residential customers, and 225 route miles of metro fiber in its portfolio, as well as 650 lit buildings.

When the deal closed in March 2012, HickoryTech immediately gained a metro fiber network in Fargo, which it added to the assets of its subsidiary, Enventis, tripling the number of on-net fiber-lit buildings in the Fargo market.

Why it's significant: HickoryTech clearly is looking to capitalize on its fiber investments by focusing on the business services segment. IdeaOne posted $12.3 million in revenue in 2011, thanks to business service sales. With the completion of HickoryTech's fiber buildout between Fargo and Brainerd, its customers will benefit from added network diversity under a single provider's umbrella.

HickoryTech's bet appears to be paying off. In Q3 2012, the telco posted a 36 percent year-over-year increase in revenues in its fiber and data services segment, to $15.7 million, while operating income in the segment climbed 27 percent, to $2.4 million.