Windstream fills up with little bites - Top Telecom M&As for 2009

With the pre-Thanksgiving announcement that it would purchase Iowa Telecommunications--it's fourth acquisition this year--Windstream is one of three service providers leading the charge for the long-overdue consolidation of the tier two ILEC market. Following CenturyTel's marriage proposal to purchase the much-larger EMBARQ last October, Windstream began its acquisition meal last spring when it decided to augment its ILEC holdings in Pennsylvania when it reached a deal to buy D&E Communications.    

Regardless of how many lines it may or may not have in comparison to Frontier and the newly created CenturyLink, what's obviously different about Windstream is its approach to M&A. Given the complexity that comes with integrating not only the networks, back office systems and other intangibles such company cultures, Windstream seems to be taking a building block, or small incremental bites approach to M&A. Unlike its fellow large tier two compatriots CenturyLink and Frontier, Windstream's strategy has focused less on the one big deal, and more on snapping up smaller telcos (D&E Communications, Lexcom and Iowa Telecommunications) and one CLEC (NuVox).  

But Windstream's M&A desire is showing no signs of slowing down. Despite already spending $2.2 billion on M&A this year, Windstream--whose traditional landline profits continue to erode at the hands of cable competition and wireless substitution--believes the best way to keep down costs and stay competitive is to expand via buying other independent ILECs.   

"Scale is still important to driving down our cost structure," said Jeff Gardner, CEO of Windstream in a recent interview with Bloomberg. "We've been working to grow the business through acquisitions since 2006."

Windstream fills up with little bites - Top Telecom M&As for 2009
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