Windstream said the $227.5 million cash deal will bolster its enterprise-focused product portfolio and drive $30 million in annual operating synergies.
Regional telecommunications operator Windstream Holdings announced plans to acquire cloud-based unified communications provider Broadview Networks Holdings for $227.5 million in cash.
Windstream, which earlier this year completed a $1.1 billion merger with Earthlink Holdings, said the move will bolster its product portfolio targeting enterprise customers and “leverage Broadview’s experienced sales force and cloud operations across our national footprint.” Broadview offers UC solutions under the OffuceSuite UC brand.
Windstream said it’s financing the deal with cash on hand and revolving credit capacity. The company touted $30 million in annual operating synergies within two years of the deal closing, which it said would improve its balance sheet by reducing leverage and be accretive to free cash flow in the first year.
The board of directors at both companies are said to have approved the deal, which is expected to close during the third quarter.
A recent survey released by cloud communications provider Broadsoft found service providers expect IP-based UC line shipments to pass 51% by 2020. Mobility was stated as a key driver toward cloud-based communications, according to the study; “By 2020, respondents expect mobile-only UC adoption in businesses across the globe to reach 41%.” Another consideration is increasing convergence of fixed and mobile systems, which survey respondents expect to reach 49% by 2020.
Windstream earlier this year launched a software-defined wide area network solution from VeloCloud in a move to allow enterprise customers more control over their networking needs. Windstream said the SD-WAN platform offers its regional-sized enterprise customers “a more tailored, flexible and controllable WAN experience.”
Windstream is also in the process of bolstering its enterprise-focused wireless broadband offering through an equipment deal with CBNL and a spectrum leasing arrangement with Straight Path Communications. The deal calls for Windstream to use CBNL’s point-to-multipoint 39 GHz radios to improve last-mile connectivity in key markets around the country and lease spectrum resources from Straight Path.
Tangentially, AT&T this week announced plans to acquire Straight Path and its 868 spectrum licenses in the 28 GHz and 39 GHz bands for $1.6 billion. For Straight Path, the deal is set to conclude what has been an eventful couple of months as the company earlier this year agreed to a settlement with the Federal Communications Commission over spectrum license build out requirements. As part of the settlement, Straight Path agreed to pay a $100 million civil penalty to the United States Treasury, surrender 196 of its spectrum licenses in the 39 GHz band, and sell the remainder of its license portfolio, with 20% of those proceeds also paid to the Treasury as “an additional civil penalty.”
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