News
U.S. telco consolidation rumbles on as smaller players seek scale.
Consolidation in the U.S. continued on Monday, as Windstream and Earthlink became the latest telcos to announce a merger.
The $1.1 billion (€993.82 million) all-stock deal will see Windstream, which serves 1.06 million residential broadband customers, 138,500 small businesses, and 26,600 enterprises, take a 51% stake in the combined entity, while the remaining 49% will be held by smaller rival Earthlink.
The resulting company will boast 145,000 route miles of fibre covering strategic markets in the northeast and southeast of the U.S., and will offer a range of connectivity, managed services, voice, Internet, and value-added services to residential and business customers.
Monday’s deal was announced exactly one week after CenturyLink struck a $34 billion deal to merge with Level 3.
"The combination with EarthLink further advances Windstream’s strategy by creating a stronger, more competitive business to serve our customers while increasing free cash flow and reducing leverage," said Tony Thomas, CEO of Windstream, in a statement.
"With this transaction, we are combining two highly complementary organisations with closely aligned operating strategies and
business unit structures," he added.
Under the terms of the deal, Earthlink shareholders will receive 0.818 shares of Windstream for each Earthlink share.
The merger is expected to generate annual synergies of $125 million within 36 months of the deal’s completion, which is expected to happen in the first half of 2017, subject to approval by the Federal Communications Commission (FCC), and customary closing conditions.
"We are pleased to join forces with a company that shares our core values and operating philosophies, and whose strategy complements our own," said EarthLink chief Joe Eazor.
"In our work with Tony and his team, it’s become clear that we are two companies on parallel paths," he said. "Now is the right time for us to come together."
After the deal closes, Windstream’s Thomas will serve as CEO of the combined company. Windstream CFO Bob Gunderman will become its finance chief.
Windstream said several senior Earthlink staffers will join the new company; it is not clear at this stage whether that includes CEO Joe Eazor.
