Windstream Corp., a Little Rock, Ark.-based local phone company focused on rural and smaller markets, said it’s agreed to buy a smaller rival, Iowa Telecom, for $530 million — $261 million in cash and $269 million in stock. In addition, it will take on about $598 million in debt. This is Windstream’s fourth acquisition in the past few months: It also bought D&E Communications ($169 million), Lexcom ($141 million) and NuVox ($463 million). Windstream is trying to become the consolidator of the smaller, rural telecoms, especially after two of its biggest rivals — CenturyTel and Embarq — merged their operations a year ago.
By way of background, in 2005, AllTel, a rural local phone company, spun out its landline business to instead bet its future on the fast-growing wireless industry. It merged the landline business with VALOR Telecom to form a new company called Windstream. AllTel itself ended up becoming part of Verizon, which bought it for $28.1 billion in June 2008.
Windstream is trying to fight the sands of time, which are against most landline companies. A consumer preference for wireless and better offerings from cable providers is only accelerating the loss of landlines for phone companies of all stripes. Verizon, for example, is focusing all its energies on mobile and its fiber-based efforts, and selling off its landline business wherever it can.
One bit of good news for Windstream: The company crossed the 1 million broadband subscribers-mark last quarter, adding 25,000 new subs to take the total to 1.05 million.