WindstreamIt’s now quite clear that Windstream is on an acquisition tear. Today they announced their intention to acquire Iowa Telecom in a deal worth $1.1 billion. This latest acquisition joins a string of recent Windstream acquisitions incluing NuVox, D&E Communications, and Lexcom.

Windstream’s strategy is quite clear now – they’re selectively buying smaller strategic assets to increase scale. It’s a different approach than their other tier 2 telco brethren, including CenturyTel, FairPoint, Frontier, and Embarq, all of whom are involved in single transactions that dramatically increase the size and scale of their operations.

This M&A activity illustrates the continuing trend of consolidation in the rural telecom industry. As the rural telecom landscape evolves rapidly, companies are looking to grow scale in order to better weather possible storms, as well as better execute in the growing business lines of broadband, wireless, and entertainment, where scale matters. We call it the rise of the ‘rural super carrier.’

With the Iowa Telecom acquisition, Windstream gains 256,000 access lines, about 95,000 high-speed Internet customers and about 26,000 digital TV customers across Iowa and Minnesota. The transaction also includes Iowa Telecom’s 15 FCC Advanced Wireless Service licenses and three 700 MHz Band licenses, perhaps signaling Windstream’s intentions to pursue a wireless strategy of some sort.

“These are well-run, profitable properties in very rural service areas that expand our presence in the Upper Midwest and grow our free cash flow per share,” said Jeff Gardner, president and CEO of Windstream in a company statement. As a part of the transaction, Iowa Telecom Chairman and CEO  Alan Wells will join the Windstream board of directors.

Given Windstream’s posture, one has to ask, who’s next?

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