Windstream is buying Q-Comm, a privately held company that owns a regional fiber transport and a competitive local exchange carrier (CLEC). The total price will be approximately $782 million.
Q-Comm is the latest among smaller service providers to have been swept up in the recent and ongoing wave of consolidation that has seen Cablevision buy Bresnan for about $1.3 billion, Qwest and CenturyLink agree to merge, Knology bid for Sunflower Broadband and SureWest buy Everest Broadband. While not an instance of consolidation, RCN is being purchased by Abry, an investment firm, for about $1.2 billion.
Q-Comm has two wholly owned subsidiaries that Windstream is buying. Kentucky Data Link (KDL) is a fiber services provider whose network snakes through 22 states, and Norlight is a CLEC with customers scattered throughout the Midwest.
KDL primarily serves wireline and wireless carriers, as well as the large enterprise, government, education and medical markets. KDL's contiguous fiber network spans nearly 30,000 fiber route miles in 22 states. Norlight serves approximately 5,500 small- and medium-size business customers primarily in the Midwest.
Windstream said it expects to leverage KDL's network to bid on wirless backhaul opportunities.
Windstream said it expects to issue approximately 20.6 million common shares valued at $237 million, supplemented with approximately $278 million in cash. Windstream said it also will repay estimated Q-Comm debt balances of approximately $267 million, net of cash acquired.
"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. "KDL's extensive fiber network creates savings for us, as well as opportunities to grow business revenues, particularly transport services for wireless carriers."