HickoryTech (Nasdaq: HTCO), a growing Minnesota-based independent ILEC, has moved to acquire Fargo, N.D.-based IdeaOne Telecom Group for $28 million.
Having extended its fiber network to Fargo last year, John Finke, HickoryTech's president and CEO, said the deal gives it "immediate access to the market, making our entire portfolio of business services available to IdeaOne customers."
This extension will be complemented by a new middle mile network it is building via a $16.8 million broadband stimulus grant that will include a route from Brainerd, Minn. to Fargo in 2012.
The ability to beef up the business and residential portfolio is important for any independent ILEC to offset losses from traditional telephone services.
By acquiring IdeaOne, HickoryTech will gain about 3,600 business and residential customers and 225 fiber route miles. A key point of the fiber network as it relates to the business market is its reach into 650 on-net lit buildings, something that business customers look for when considering their service provider. In addition the network has multiple 10 Gbps fiber rings, Ethernet, softswitch voice capabilities and colocation services.
To finance the deal, the service provider said it will leverage existing liquidity through cash reserves and additional term debt available under its existing credit facility, which was designed to target acquisition opportunities like the IdeaOne purchase.
Once the deal gains necessary state and federal regulatory approvals, the boards of both companies, which have already approved the acquisition, expect to close it in Q1 2012.
- see the release
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