Windstream to buy Kentucky Data Link, Norlight

Windstream's (Nasdaq: WIN) ongoing acquisition conquest continues. This time, the independent ILEC is going to acquire Q-Comm Corporation (Q-Comm), a privately-held regional fiber transport and CLEC based in Overland Park, Kan. for about $782 million.

To fund the deal, Windstream will issue about 20.6 million common shares and pay about $278 million in cash. In addition, Windstream will repay about $267 million in Q-Comm debt.

With Q-Comm, Windstream will bolster its fiber network and growing CLEC business as the acquisition includes Kentucky Data Link (KDL), a fiber provider that spans 22 states, and Norlight, a Midwest-based CLEC.   

Both KDL and Norlight bring various benefits to Windstream. By adding KDL to its fold, Windstream will complement its previously announced effort to upgrade and expand the fiber network in its own 16-state ILEC territory with an additional 30,000 fiber route miles. Meanwhile, the addition of Norlight will enable Windstream to expand its presence as a competitive force in the SMB market with the addition of about 5,500 SMB customers, a base it started to build with its previous acquisition of the former NuVox.

In June, a rumor emerged that KDL along with other fellow fiber providers Alpheus and Fibertech were shopping themselves out to potential buyers.

"This transaction builds on Windstream's strategy to become a next-generation telecom provider focused on broadband and enterprise customers," said Jeff Gardner, president and CEO of Windstream in a release. "KDL's extensive fiber network creates savings for us as well as opportunities to grow business revenues, particularly transport services for wireless carriers."

Wireless backhaul will be an increasingly crucial business opportunity for wireline-centric operators such as Windstream. Not having a wireless business of its own, Windstream like many of its wireline-centric ILEC counterparts (CenturyLink and Frontier) have been tapping into the increasingly lucrative wireless backhaul business as another new revenue source.

However, Windstream isn't taking a ‘build it and they will come' mentality with building out its fiber networks for wireless backhaul or business services by acquiring Q-Comm. Instead, Windstream said it will "increase success-based capital expenditure investments in the near term" with a concentration on "the wireless backhaul and enterprise businesses." Prior to the acquisition announcement, KDL signed a number of unnamed enterprise and wireless backhaul contracts.

After it gets necessary state and federal regulatory approvals, Windstream expects to wrap the acquisition, which has already gotten approval from both company boards, by Q4 2010.

Windstream KDL coverage area

For more:
- see the release here
- Wall Street Journal also has this article (sub req.)

Related articles:
Windstream Q2: Profit down, but revenue up 22 percent
KDL, Alpheus and Fibertech fiber networks are up for sale
Windstream wraps up acquisition of Iowa Telecom
Windstream completes acquisition of NuVox
Windstream fills up with little bites - Top Telecom M&As for 2009
2009 Year in review: Tier 2 telco consolidation finally begins

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