Windstream: Waiting to strike? - Sizing up ILEC M&A activity

Unlike its rural ILEC compatriots CenturyTel and Frontier, Windstream has been a bit more conservative on the M&A front, choosing to purchase really much smaller ILECs such as D&E Communications and more recently NC-based Lexcom. In many respects, Windstream has always been conservative. Knowing that its landline base continues to erode, the company is not going out and making lots of purchases. Not surprisingly, many in the industry are wondering when the Arkansas-based ILEC is going to make a real big acquisition of a bigger tier 2 ILEC? That's not to say the conservative ILEC has never considered, or isn't considering, a large acquisition, however.

One possible answer about Windstream's larger M&A desires emerged last week when a rumor appeared in the New York Post that Windstream was thinking of making a bid for the beleaguered FairPoint Communications. FairPoint is currently facing bankruptcy and continued scrutiny by the public utility commissions in Maine, New Hampshire and Vermont. Could Windstream be FairPoint's knight in shining armor? Well, maybe. But given the ongoing challenges FairPoint has run into its inability to overcome them, could be a big headache for Windstream to acquire. Not only would they have to integrate the company's operations but a massive PR campaign to regulators and the customer base that it would quickly resolve the ongoing issues that plagued Windstream since it bought Verizon's lines. That's a tall order and if it did make that move would it be able to repair the damage and is truly worth the risk?