Windstream's acquisition of EarthLink over the winter is looking like the start of a broader plan. This morning the Arkansas-based network operator announced a followup deal, signing an agreement to acquire Broadview Networks. If that sounds familiar, it's because I actually suggested the same idea back in February.
Not unlike EarthLink, Broadview has spent the better part of the last decade transforming a legacy telecom business model into one focused on cloud and unified communications services for the SMB marketplace. It took longer than their buyers probably expected and it certainly wasn't pain-free, but the inevitable steady decline of revenues bottomed out last year and had started to turn around in the other direction at long last and margins have been on the rise.
In terms of infrastructure, the company operates some 3,000 route miles of fiber in the northeastern US as well as two data centers, and handles the last mile largely through Verizon. The acquisition is quite complementary for Windstream, adding some assets and customers in the northeast that will help improve scale there and bringing some additional UCaaS capabilities to the table.
Windstream will be paying $227M in cash to acquire Broadview, and expects to squeeze out some $30M in annual operating services. In 2016, Broadview generated some $289M in revenue, earning EBITDA of $49M and an actual profit of $2.3M. There are definitely other such targets for Windstream if their appetite holds up, although the integration of EarthLink and Broadview will probably keep them busy for a while.