Sizing up ILEC M&A activity

It might seem a long time ago (actually, it was only in early 2005) that Verizon and the former SBC put some of the last nails in the tier one ILEC merger/acquisition coffin with the purchase of the former legacy AT&T and then MCI. Qwest, as we all know, remains the smallest member of the RBOC family.

Following the tier one ILEC consolidation wave, it seemed only inevitable that the tier two ILEC market would follow suit. And while many of the tier two operators have over the years acquired one another and rural lines owned by the former GTE, now Verizon, it was only a matter of time before some big deals would happen.

What did hamper major deals in recent years was a tightening of the capital markets and a crippling recession. However, the first real shot of tier two telco consolidation movement was heard last October when CenturyTel announced that it would acquire the former EMBARQ. Then, there's the well-documented problems FairPoint has been working through since it bought Verizon's old lines up here in New England. Some have said in response to the stories we have written on FairPoint that the real blame could be on Verizon giving FairPoint bad information. 
But the biggest deal in the rural tier 2-3 telco market was announced in  May when Frontier reached an agreement to become the fifth largest telco by purchasing Verizon's rural lines. Staying out of the tier two telco fray has been Windstream, which despite rumors of picking up the beleaguered FairPoint, has been mainly snapping up smaller telcos.

Of course, the other question I have is what about Qwest? Yes, I know they're not a tier two ILEC, but they are obviously much smaller than their bigger Bell brothers. We obviously saw the first glint of what they could potentially do with the rumors that it might sell off its long haul assets, which as we all know died on the vine when apparently they did not get the hefty $2 billion offer they thought they deserved.

I decided to plot out here our own perspective on the activity these service providers have engaged in over the past year. Take a look and let us know what you think?--Sean