FairPoint Communications (Nasdaq: FRP) on Thursday wrapped up the sale of its Idaho-based network properties to Blackfoot Telecommunications for about $30 million, a sale that illustrates the telco's ongoing dedication to sharpening its focus on its growing New England markets.
Prior to the sale, FairPoint's Eastern Idaho operations served over 5,000 residential and business customers and generated about $8 million in revenue and approximately $5 million in EBITDA, with capital expenditures of approximately $1 million.
Now that the sale is complete, 11 FairPoint employees in the region will become members of Blackfoot's staff.
The deal has benefits for both telcos.
For FairPoint, selling its Idaho properties is part of its move to grow the company and enhance its own profitability, particularly in its core New England markets of Maine, New Hampshire and Vermont.
During an interview conducted with the Associated Press last August, FairPoint CEO Paul Sunu laid out what he called the company's "four-pillar strategy," which is centered on improving its operations, getting more regulatory freedom, improving productivity and increasing sales. At that time, Sunu said FairPoint still had work to do to increase sales.
In New England, FairPoint has been making progress on the sales front, winning contracts to provide its growing Ethernet service portfolio to New Hampshire's Mount Washington Observatory and the New England Telehealth Consortium Network. These contracts were complex, multi-faceted network builds that will provide the telco with much-needed proof points that its growing Ethernet strategy is working.
Blackfoot's acquisition of FairPoint's Idaho properties is about scale and the ability to compete more effectively against the growing threat of cable operators offering residential voice and business services in the state. By acquiring FairPoint's assets, the telco will add 5,400 residential and business customers in Eastern Idaho and increase its fiber backbone by 25 percent across 8,500 square miles in both states.
The deal reflects Blackfoot's "Smart Growth" initiative that began in the late 1990s when the telco acquired telephone lines from US West--now CenturyLink (NYSE: CTL). With a fiber-based strategy in place, the telco plans to expand its operations into Pocatello, Idaho's fifth largest city.
In a broader independent ILEC trend, Blackfoot, like other smaller telcos such as Hargray, Ritter and WVT Communications (now Alteva), is looking to find new customer targets at a time when the company's traditional regulated voice revenues continue to decline.
These acquisitions will enable lucrative business accounts focused on next-gen services like unified communications and, of course, Ethernet at a time when Blackfoot's traditional legacy voice revenues are in decline due to cable competition and consumers opting to use wireless as their only voice connection.
- see the release
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