Telecom company Cincinnati Bell is set to expand the reach of its fiber communications and IT services with dual acquisitions totaling around $851 million.
The operator says it has signed separate agreements to both combine with Hawaiian Telcom in a deal worth approximately $650 million and acquire OnX Enterprise Solutions for $201 million in cash.
Wells Fargo Senior Analyst Jennifer Fritzsche notes the move will net Cincinnati Bell Hawaiian Telcom’s 4,300 miles of fiber, as well as 110,000 internet subscribers, 43,000 video customers, and 68,000 fiber-connected enterprise buildings. Cincinnati Bell says the combination will give it access to not only the Honolulu market, but also growing communities on neighboring islands. Additionally, the company reports it will gain direct access to 2.6 TB of Trans-Pacific fiber cable capacity linking Asia and the United States, expanding its route diversity and providing exposure to “large, data-hungry demographics on both sides of the Pacific.”
Cincinnati Bell indicates Hawaiian Telcom’s 1,300 employees will join its own 3,000-person strong workforce in pursuit of “complementary values, goals, and business strategies, including a shared focus on investment in fiber.” The merger is not expected to materially impact jobs in Hawaii, the company notes.
Though Cincinnati Bell and Hawaiian Telcom will keep their own names and brand identities, the companies will share best practices and resources. Hawaiian Telcom will continue to be locally managed from Hawaii, with union labor agreements honored, and the brand will have two seats held by Hawaii residents on the combined company’s board.
A bit closer to home, Cincinnati Bell’s acquisition of OnX will reportedly scale the company’s enterprise IT and cloud service solutions via the addition of more than 20 IT sales offices and access to more than 50 data centers through strategic partners. The company indicates the move will increase its presence both stateside and in Canada.
“Cloud migration, the need for fiber infrastructure that supports 5G-ready, high-density data transmission, and IoT are the key trends that will define telecommunications in the future. The implementation of our refined strategy, coupled with today’s combinations, will help build two distinct businesses with the appropriate scale, structure, and leadership to deliver superior operating results, while providing strategic optionality from a diversified but complementary portfolio of assets,” Cincinnati Bell CEO Leigh Fox comments. “Today’s announcement positions us to capitalize on these favorable market dynamics while enhancing our leadership at the forefront of the telecommunications landscape. Together, Hawaiian Telcom and OnX bring Cincinnati Bell greater financial and operational scale and established market positions in new geographies.”
Fritzsche confirms the deals will help Cincinnati Bell gain “needed scale in the communications and IT services businesses” – increasing its enterprise market exposure from 69 percent to 76 percent – but notes “revenue synergies on the communications side will be limited by the disparate geographic footprints in which it will operate.” Additional telecom and IT services deals could be in the cards for the company, she adds.
Cincinnati Bell expects the OnX deal to close in the beginning of the fourth quarter 2017, and the Hawaiian Telcom transaction to close in the second half of next year.
