Windstream Closes NuVox Deal, Gets Big SMB Base

Kelly Teal, Contributing Editor

February 8, 2010

2 Min Read
Windstream Closes NuVox Deal, Gets Big SMB Base

Windstream Corp. (WIN) has closed the acquisition of privately held CLEC NuVox Inc. in a deal that gives the rural ILEC a much-needed business focus.

The value of the takeover announced Nov. 3, 2009 rose from an initial $643 million to $647 million, Windstream said on Monday. Windstream issued 18.7 million shares of its common stock, based on Feb. 5s closing price, and paid $280 million in cash. The rural ILEC also paid off $180 million of NuVoxs net debt.

Windstream financed the acquisition with proceeds from a debt offering conducted in December.

The Arkansas-based Windstream added about 90,000 business customers in 16 states with the NuVox takeover. And thats the kind of acquisition Windstream needs. The carrier mostly has counted on landline profits since its inception 66 years ago. In the 21st century, however, home phone demand has plummeted with the advent of mobile and VoIP technologies, making wireline dependence a near-recipe for extinction. Windstream has axed hundreds of jobs as a result. And while Windstream does sell broadband and digital TV services, its coverage is limited mostly to residential users. Recent purchases think D&E Communications and Lexcom only enhanced that consumer concentration.

But the NuVox deal beefs up Windstreams SMB expertise.

The NuVox markets are contiguous to our properties, and the transaction bolsters our strategy to focus more on the business customer,” Jeff Gardner, Windstream president and CEO, said in a prepared statement. “NuVox is a very strong company that has steadily delivered revenue growth and improved margins.

With the addition of NuVox, Windstream now reaches 16 states. Windstream will sell business services in those markets largely through NuVoxs indirect channel.

Half of Windstreams annual revenue now comes from business and broadband, the service provider said.

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About the Author(s)

Kelly Teal

Contributing Editor, Channel Futures

Kelly Teal has more than 20 years’ experience as a journalist, editor and analyst, with longtime expertise in the indirect channel. She worked on the Channel Partners magazine staff for 11 years. Kelly now is principal of Kreativ Energy LLC.

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