Zayo sells off Scott-Rice LEC operations for $42M to New Ulm Telecom

Two businessmen shaking hands in a hallway
Zayo lets go of its Scott-Rice ILEC operations. (Getty/Sam Edwards)

Zayo has sold off its Scott-Rice Telephone Co. operations for $42 million to New Ulm Telecom, reflecting its ongoing desire to focus its attention on selling fiber-based services to carriers and enterprises.

Scott-Rice Telephone, which was part of the former Integra Telecom, came to Zayo as part of its March 2017 purchase of Electric Lightwave.

After completing the ELI acquisition, Scott-Rice Telephone has been managed separately but within Zayo’s Allstream business segment. Scott-Rice Telephone serves residential and business customers in areas of Scott and Rice counties southwest of Minneapolis.

RELATED: Zayo acquires Electric Lightwave for $1.42B, deepens western market fiber holdings

The ILEC provides phone, video and internet services with over 18,000 connections, serving the communities of Prior Lake, Savage, Webster, Elko and New Market, Minnesota.

“This transaction represents further progress toward the separation of our Allstream business,” said Matt Steinfort, Zayo’s CFO, in a release. “It is consistent with Zayo’s strategic focus on communications infrastructure and our goal of maximizing the value of our noncore assets.”

Set to be completed in June 2018, the sale is subject to customary closing conditions and regulatory approvals, but it is not subject to New Ulm Telecom shareholder approval. 

The deal has been unanimously approved by the boards of directors of New Ulm Telecom and Zayo. New Ulm Telecom expects the transaction to close during the second quarter of 2018.

This is not the first time Zayo has sold off assets following a large acquisition. After purchasing 360networks in 2011, Zayo sold that company’s wholesale VoIP business, which became become part of Onvoy Voice Services.