Shares of Windstream Corp. were trading slightly higher on Wednesday after the Little Rock, Ark-based carrier said its making yet another acquisition.
In the past year, Windstream has purchased NuVox and Iowa Telecom, gaining greater traction as a fiber services provider as it steers away from its local telephone roots. Now, Windstream again is expanding its fiber presence to businesses and government agencies, snapping up Q-Comm Corp. for the Kentucky Data Link (KDL) and Norlight subsidiaries. KDL specializes in long-haul fiber that spans 22 states; Norlight is a CLEC serving businesses in the Midwest. Both companies are based in Evansville, Ind.
Windstream will pay $782 million in cash and stock; however, once Windstream pays off Q-Comms net debt, the deals value will total about $515 million.
The Windstream and Q-Comm boards have approved the sale and expect it to close in the fourth quarter. Meanwhile, Windstream expects to pump up capex investment as it concentrates on wireless backhaul and enterprise customers, driven in large part by contracts KDL has been winning.
“KDL’s extensive fiber network creates savings for us as well as opportunities to grow business revenues, particularly transport services for wireless carriers,” Jeff Gardner, president and CEO of Windstream, said in a prepared statement.
Standard & Poors said on Wednesday Windstreams corporate credit rating remains unaffected by the transaction because the company isnt overextending itself. Plus, KDL and Norlight are more competitive than Windstreams core incumbent local exchange” focus, analysts wrote in a client memo.
Windstream stock was priced at $11.50 by about 3:30 p.m. Eastern on Wednesday.