Minnesota based independent telco HickoryTech is buying IdeaOne, a Fargo, ND based CLEC, the company announced today. It’s an all cash transaction valued at $28 million.
The move illustrates an ongoing strategy by telcos, large and small, to diversify their business by investing in fiber fed enterprise and wholesale focused assets. IdeaOne provides “…data networking, Internet, colocation, phone and hosting services to approximately 3,600 business and residential customers in the Fargo area.” The majority of IdeaOne’s fiscal 2010 revenue of $11.1 million came from business services.
“This acquisition further advances our strategy of growing our business and broadband services,” said John Finke, HickoryTech president and chief executive officer in a press release. “Last year, we extended our fiber network to Fargo. This transaction gives us immediate access to the market, making our entire portfolio of business services available to IdeaOne customers. The completion of our Broadband stimulus route from Brainerd, Minn. to Fargo, North Dakota in 2012 will further enhance our capabilities and services in this market.”
IdeaOne was formed in 1998 as a partnership between Cass County Electric and a group of North Dakota ILECs during the CLEC boom. It’s one of the lucky CLECs to have survived.
Mankato, Minn. based HickoryTech is no stranger to building shareholder value through business and wholesale services. Their subsidiary, Envintis, operates a regional fiber network providing business, enterprise, and wholesale services across the upper Midwest. The IdeaOne acquisition expands this footprint and revenue opportunity.
The acquisition will add an additional 225 fiber route miles to HickoryTech’s regional network. IdeaOne’s network currently has 650 on-net fiber-lit buildings, multiple 10 GB fiber rings, ethernet capabilities, soft-switching infrastructure, and colocation services. They currently serve 1,900 business and 1,700 residential customers.
The boards of both companies have already approved the transaction, which is expected to close in the first quarter of 2012, pending necessary regulatory approvals from state and federal authorities.