Following closely on the closing of its acquisition of FiberNet from One Communications, nTelos (NASDAQ:NTLS, news, filings) has revealed just what it plans to do with the assets. They plan to split the combined entity into two independent companies, separating the wireless and wireline businesses into two public companies. The transaction will be structured as a tax free distribution of shares in the new, still un-named wireline company to NTELOS’s current shareholders in the second half of 2011.
And then, we will have one more regional fiber operator to keep a close eye on here on Telecom Ramblings. NTELOS’s wireline business consists of two RLEC entities focused on the western Virginia cities of Waynesboro and Covington and parts of the surrounding counties, and of course a CLEC business spanning West Virginia and parts of Pennsylvania that operates 5,700 miles of fiber. It did $214M in revenue and $105M in EBITDA in the twelve months ending on September 30. I presume that doesn’t include some administrative expenses shared by the overall company, else their EBITDA margin would be 49% as an independent entity.
So why are they doing this? According to CEO James A. Hyde:
Both our wireless and wireline businesses generate strong cash flows and have talented management teams in place. With this separation each will be better positioned to leverage their distinct competitive strengths, manage their operations and capital investments, and pursue growth strategies to enhance shareholder value.
There aren’t many regional combinations of wireless and wireline assets, and one of the few out there is now separating itself – apparently there aren’t many synergies or the two simply step on each other’s toes. On the other hand, pure fiber businesses have been enjoying a fair amount of interest. Given that this won’t happen for a year, perhaps they might get a better offer while they are waiting. Hmm, a pairing of RLEC assets with fiber in WV would fit nicely over at Windstream…
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