TelePacific Buys Tel West, Gains Foothold in Texas

June 28th, 2011 by · 4 Comments

Well, the question of when California-based CLEC TelePacific might finally take its business model beyond its west coast turf is now moot, as the company today announced its intention to buy Austin-based Tel West.  Tel West does most of its business in Texas, but also has a facilities-based presence up in Seattle as well as customers throughout the region with a total of around 3,400 SME, enterprise, and government customers.  Moving into the Texas market seems like a smart move for TelePacific, which has been increasingly aggressive on the M&A front lately but until now hadn't moved beyond its traditional turf.

One key thought here is that while TelePacific's business is mostly derived from the traditional CLEC model, when they chose to move into Texas they did so by buying another CLEC that also had a fair amount of fiber helping them maintain better margins.  Interestingly, a good fraction of the the fiber assets owned by both companies actually share some history, having both bought metro fiber assets from the former ICG back in Dan Caruso's pre-Zayo days.  Tel West bought ICG's Texas fiber business, which gave them some fiber loops and on-net buildings in Dallas, Austin, San Antonio, Houston, Fort Worth, and Corpus Christi.  TelePacific's California intercity and metro fiber network comes largely from the MPower acquisition, which in turn picked up those fiber assets in LA from ICG back in 2005.

When Tel West picked up those assets from ICG in 2005, SEC filings say there consisted of 81 route miles, 10,429 fiber miles, and 34 on-net buildings.  I don't think they have been aggressively building out that fiber since then, but I'd be interested to hear what they consist of nowadays.

Telepacific has been mentioned as both a potential buyer and seller in the M&A rumor mills, but they have seemed ready to do some buying for some time now IMHO.  They have been fairly cautious, but if they decided to make a big move then perhaps they might go after Integra Telecom at some point.  At least, the strategic fit looks fairly compelling.

Categories: CLEC · Mergers and Acquisitions · Metro fiber

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