Windstream Closes PAETEC Deal

December 1st, 2011 by · 1 Comment

It's official, Windstream (NYSE:WIN, news, filings) is now a national super-CLEC. Today they closed their purchase of PAETEC (news, filings) in a $2.3B stock deal, bringing the competitive service provider's $2B in annual revenue under their wing. Of course, Windstream's earlier purchases of Nuvox and KDL/Norlight had already taken them quite a distance down this road, but PAETEC gives them a much, much larger presence outside of their ILEC footprint.

Windstream now faces a substantial integration task, if for no other reason than that PAETEC was into so many lines of business other than voice/data/copper/fiber - software, energy, fixed wireless. There will no doubt be layoffs as part of that process, and of course Rochester has been scaling back its expectations for months now.

But we can also hope that this ILEC/CLEC combination gains some traction and makes back some of that ground over time. PAETEC had assembled a lot of fiber that it hadn't finished mobilizing to improve its own margins and lower churn. Where Windstream points those assets from here should be interesting to watch. I'm also curious what they will do with the EoC footprint, a product that PAETEC was seeing growing interest in. Will Windstream double down outside its own turf? Or will they repurpose that product toward their ILEC footprint? We shall see.

Some speculated that another bidder might emerge back in October, specifically Level 3.  But that was only analyst smoke, as far as I can tell there was never any actual movement.

And just for the meaningless heck of it, I did call 12/1 for the closing of this deal.

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Categories: CLEC · ILECs, PTTs · Mergers and Acquisitions

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