Demonstrating that consolidation and M&A activity is not just for tier one providers like CenturyLink, Qwest, and AT&T, tier three provider Otelco announced their latest acquisition, Shoreham Telephone Company of Vermont for approximately $4.5 million in cash.

“The acquisition of Shoreham is a strategically important opportunity for Otelco to continue the expansion of our footprint in New England,” said Mike Weaver, President and Chief Executive Officer of Otelco in a news release. “While Shoreham has similar roots to Otelco as a rural wireline telephone provider, its existing network in Vermont provides an excellent point from which our CLEC (OTT Communications) can begin serving our fourth state. We are very excited about this transaction and its impact as a catalyst for future growth.”

As of December 31, 2010, Shoreham had 4,975 access line equivalents and generated approximately $2.4 million in total revenue.

Advertisement

Headquartered in Oneonta, Alabama, Otelco operates several rural ILECs in Alabama, Maine, Massachusetts, Missouri, New Hampshire and West Virginia. They also operate a CLEC, OTT Communications, in the Northeast. As of December 31, 2010, Otelco operated 99,639 access line equivalents, which by their definition, includes traditional access lines and broadband lines (cable modem and DSL). Otelco also counted 4,227 cable TV customers and 149,043 wholesale connections.

 

 

Join the Conversation

6 thoughts on “Otelco Buys Shoreham Telephone Company

  1. Thanks, Bernie – so if they have both are they counting that as one or two? This is a very low value per access line – it will be very interesting to see how this stacks up to future deals as it is inevitable that more companies will see the writing on the wall.

  2. There is no way to draw any meaning from this as a price per access line (however defined). The purchase is to be of Shoreham's common stock, which includes assuming any liabilities.

    For example, if it is leveraged with debt, the equity value for the common stock is negatively affected, leading to a low price per access line.

    The only meaningful way to compare prices per access line is to know what the overall purchase price is for the assets, before considering any debt or other liabilities assumed. Otherwise, the comparisons are completely and utterly meaningless. Anyway, access lines are not a very meaningful measure anyway anymore. Buyers care about earnings and cash flow. That's what ultimately drives the price.

  3. Regardless of the valuation or deal analysis method, I think its safe to say the total value of these deals is heading in the wrong direction. That is, from a current owner's point of view. As you point out, cash flow is king – what's the future of legacy telco cash flow?

  4. OK, great, but what dose this mean to the current customers, and even greater disadvantage in a monopoly stricken area of telecommunications. Will this mean a greater bang for the buck as far as Internet speeds and such, a reduction in service etc.

    This is my question, just look at the reviews…

Leave a Reply

Your email address will not be published. Required fields are marked *

Don’t Miss Any of Our Content

What’s happening with broadband and why is it important? Find out by subscribing to Telecompetitor’s newsletter today.

You have Successfully Subscribed!