Consolidated sells IT service equipment business to ePlus, establishes cooperative partnership

Ethernet IP
Consolidated and ePlus’ customers will gain various benefits.

Consolidated Communications is doing some trimming of its own this holiday season by selling its IT services equipment business to ePlus.

While Consolidated is shedding this unit, the service provider has signed an agreement with ePlus to cross-sell both broadband network services and IT services.

Other than saying it closed on Dec. 5, financial details of the ePlus deal were not revealed.

As a symbiotic relationship, Consolidated and ePlus’ customers will gain various benefits. This partnership will provide the service provider’s business customers access to a broader suite of IT solutions, and will also provide ePlus customers access to Consolidated's business network services.

Bob Udell, president and chief executive officer of Consolidated Communications, said in a release that the ePlus sale reflects its desire to center its attention on selling connectivity services like Ethernet and optical services.

"This transaction allows us to extend our strategy of providing technology solutions to customers across all of our markets while we sharpen our focus on network-based, business and broadband solutions," Udell said.

RELATED: Consolidated snaps up FairPoint for $1.5B, adds 3K on-net buildings, fiber to the tower footprint

Udell’s thesis about where Consolidated's business is going was certainly evident in its third quarter results. The telco reported that it grew commercial and carrier data and transport revenue by 5.2% year over year.

Driven by growth in Metro Ethernet, Consolidated’s data connections revenues were $49.7 million, up from $47.2 million in the third quarter of 2015. Total commercial revenue was $78.2 million.

Consolidated's Enterprise Services equipment and IT services business were products of the Enventis acquisition the telco made in 2014.

According to the company, the unit contributed about $55 million in revenue in fiscal 2015. By selling off the unit, Consolidated expects to enhance its revenue growth and margin profile.

At the closing of the deal, 55 employees who support the equipment business will join ePlus.

This sale coincides with the just-announced acquisition of FairPoint Communications. By acquiring FairPoint, Consolidated will be able to more readily address business customers’ needs for fiber-based Ethernet and even wireless backhaul needs with a wider portfolio of assets.