Now it’s One Communications Looking at Strategic Alternatives, So Who?

September 9th, 2010 by · 19 Comments

Yesterday, One Communications said that it has hired Blackstone to serve as its advisor as it ‘explores potential strategic alternatives’.  One Communications is a mostly fiber-light CLEC serving the northeast and Midwest, and is just the right size morsel for some of the larger CLECs to gain scale in one bite.  There is also the possibility of private equity interest, but IMHO a strategic buyer is more likely since there is less metro fiber involved.

The company already announced the sale of its Fibernet business in West Virginia to NTELOS, and it also owns a chunk of Fibertech which is also being sold off to Court Square.  So a followup sale of the rest of the company can be seen as one more step along the same path.  One is 50% owned by Columbia Ventures, which has long dabbled in telecom and fiber companies.  With a healthy M&A environment this year, it appears that Columbia is looking to shift its portfolio around.

So who would buy One Communications?  The first candidate that jumps to mind is PAETEC (news, filings), which has bought and integrated several assets of similar type and has the scale to pull it off again.  But a competing idea would be Windstream (NYSE:WIN, news, filings), which could combine the assets with those of NuVox and its newest planned addition KDL/Norlight.

Or, potentially, the company could look for someone its own size or smaller and go for scale on its own.  They could look to take out itcd and expand throughout the Southeast, or they could even work out a deal with lyns to build a bigger consolidation platform than that company is already working on.  Or they could switch gears entirely and go try to buy Intellifiber, but that’s probably too big a stretch.

Anyone have other thoughts?

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Categories: CLEC · Mergers and Acquisitions

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19 Comments So Far

  • en_ron_hubbard says:


    I don’t think the buy side thoughts are relevant here. This announcement is, i think, a clear cut for sale sign being put on the company. If I recall correctly this company’s ownership has a large component of old debt holders who will want out and want cash or marketables. If we ever get real performance numbers, a sale and the valuation metrics will be very interesting.

    • Rob Powell says:

      You’re probably right. But if private equity buys them out, they could always follow up with the other plan! I do think a sale to someone like PAET or WIN is most likely.

  • Dave Rusin says:

    They are a seller … and if you like Type 2 …

  • Birdman says:

    I though Paetec is about to announce the purchase of Cavalier Telephone including Intellifiber. That is the word from inside Cavalier.

    • BWR says:

      Interesting. I know IntelliFiber had a separate book on the street, but the CIM was for only the fiber assets, not CavTel. Buying both would be rustle the bushes, particularly for WS.

  • DeWain says:

    Now that PAETEC has purchased Cavalier/Intellifiber, how might this impact PAETEC’s interest in aquiring One Comm? Both Cavalie and One Comm have similar footprints, and both have their own COs.

    • Rob Powell says:

      I think there’s still a rationale for it simply due to the benefits of scale. The question is whether PAETEC has the stomach for two at a time.

  • CLECsDead says:

    1com is purported to better its peers’ EBITDA / cash flow, but its revenues have fallen sharply, churn continues to exceed new orders, and its OSS/Billing systems never intergrated. I’d be interested in what multiples you think are probable.

  • curious says:

    I wonder if Comcast would be interested in One Comm?

  • CLECsDead says:

    comcast or Cox, both have taken significant share from CLECs; 1com is no exception. Economically speaking it would enable the move to on-net (i.e. non-type 2) circuits, which would be great. The challenge as I see it is two fold: many of 1com’s cusotmers have multiple sites and nxT1 needs, so need WAN and other multi-site solutions. I think these larger high-revenue customers would bolt, thus undermine the valuation. Second, if they can’t move ’em off type II, they are disinclined to want them.

  • Anonymous says:

    Comcast wouldn’t waste their time, buy the way there Enterprise service offer Metro E and their customer would love it!!

  • Anonymous says:

    One Communications should just declare bankruptcy, their product soxs and their leadership should let those who know the bussiness run it instead.
    And maybe they would be on the chopping block.

  • AJ says:

    Ummm Zayo? I think with all of the movement lately this is the best possible move for Zayo. Zayo has a pretty good footprint in the NE/MidAtlantic but this would certainly strengthen it.

    Ntelos, Windstream, and Paetec are all coming on strong and Zayo really could use this one.

  • Golfen4??? says:

    Any news on One? Windstream maybe?

  • Noneya says:

    They are going to sell not buy, If they buy I can promise you Kenneth Peterson (Chairman of the Board and CEO) will no longer be there. When he originally came on board back in 2006 shortly after the merger of the 3 clecs it was One Communications intentions to have revenue over a billion within the first 18 mo and eventually go public (which ended up being Choice One’s mistake.) There were a lot of shake ups in 2008, the captains were jumping ship one by one as a sign that there were rough waters ahead… This comes as no surprise to a past branch manger, again my bet Petterson will be the next to jump ship which will push them to sell!!!!

    On a side note until they own and opperate their own fiber in many of the areas they serve their network will never be able to meet demand of future capacity growth and product offerings that many of their competitors are able to offer who do not “Rent” a backbone….

    • CLECsDead says:

      Nit picking here, but the CEO is Howard Janzen of Sprint Wholesale and Williams fame. Furthermore, I think its misleading to characterize the backbone as rented. It may lease (or “rent”) long haul circuits or hold IRUs between colos, but most carriers do. The real rental issue is its use of type II circuits from the LECs. They skew COS towards variable expenses and make it hard (difficult/impossible?) to achieve scale. CLECs like One must vigilantly watch the FCC and state PUCs where the LECs routinely seek relief from type II pricing. If they go up, kiss CLECs like One good bye. CEO and all.

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