FairPoint sells its Idaho operations to Blackfoot Telecom Group

FairPoint Communications (Nasdaq: FRP) on Wednesday signed an agreement to sell its Idaho-based operations to Blackfoot Telecommunications Group of Missoula, Mont., for $30 million in cash.

Under the terms of the agreement, Blackfoot will acquire both Fremont Telcom Co. (Fremont) and Fretel Communications, LLC (Fretel), which collectively operate as FairPoint Idaho. The deal includes a minority investment in Idaho-based Syringa Networks, a wholesale fiber-centric and business provider.

Founded in 1954, Blackfoot Telecommunications Group provides telecom services through various units to over 20,000 customers in western Montana and Idaho. By acquiring FairPoint Idaho, Blackfoot 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.  

Bill Squires, Blackfoot's CEO, said in a release announcing the acquisition of FairPoint Idaho that the company "will improve the area's ability to attract new businesses while giving owners and residents more service options to meet their growing communications needs."

These operations contribute about $8 million in revenue and about $5 million in EBITDA, and include about $1 million in capex to run and maintain for FairPoint.

After meeting customary state and FCC regulatory approvals, the purchase is expected to be completed early next year. At the time of closing, 11 FairPoint employees will join Blackfoot.

Buying FairPoint Idaho, which is its third purchase this year, is part of Blackfoot's broader "Smart Growth" initiative. Leveraging its fiber-based strategy, the telco plans to seek out expansion opportunities into Pocatello, Idaho's fifth largest city.

Besides FairPoint Idaho, Blackfoot also purchased Modwest, a local web hosting company, and is in the process of buying Cutthroat Communications, a service provider offering wireless and fiber services, which is expected to close by the end of 2012. While the "Smart Growth" initiative is relatively new, Blackfoot's expansion efforts have been going on for over a decade. In the late 1990s, Blackfoot acquired nine rural telephone exchange from U.S. West (now CenturyLink (NYSE: CTL), and upgraded those systems to serve rural businesses and consumers in western Montana.

This deal will likely fuel rumors that FairPoint going to sell more of its properties as it dedicates more resources to its northern New England operations.

For more:
- see the release

Special report: Wireline telecom earnings in the third quarter

Related articles:
FairPoint's next-generation services drive revenues to $242.1M
FairPoint continues to restore service in Northern New England
FairPoint, Frontier get into the energy game
FairPoint Communications to build New England Telehealth Consortium Network
FairPoint extends broadband to an additional 4,900 NH homes, businesses