Telecom Ramblings

On Wednesday before the Thanksgiving break, Windstream (WIN: chart, news) dropped another M&A bombshell on the telecom market, taking out Iowa Telecom for $1.1B including some $600M in net debt.  This follows the acquisition of D&E in May and its recently announced acquisitions of Lexcom in North Carolina and of CLEC NuVox just a few weeks ago.  Quite a roll-up being managed out of Little Rock this year, eh?

They may not be done yet despite the full plate.  Over on the Telephony Unfiltered blog Ed Gubbins goes through some of the possibilities, with Consolidated Communications (CNSL: chart, news) being perhaps most likely.  I’d like to add one more though.  Buying CLEC NuVox while consolidating more and more RLECs doesn’t seem to me like a finished plan, it needs another CLEC puzzle piece.  What if the next target is Deltacom (news)?  That would give them a combined CLEC/RLEC presence across the south and lower midwest the likes of which we have never really seen in the industry.

I’m not saying it would be easy – the CLEC/ILEC combination model is unproven to say the least – but it could be a transformational acquisition and it sure would be interesting to see them try.  Deltacom would also bring a fair amount of fiber crisscrossing Windstream’s footprint, connecting various dots.  That fiber could perhaps offer more opportunities for cost savings than one might get from combining adjacent RLECs.  And while they have weathered the recession through cost cuts, Deltacom has been spinning its wheels in the mud for quite a few years now.  You have to figure they’d at least be open to the idea.