NextEra Energy Affiliate to Acquire Grande's Fiber Networks
On November 18, 2010 Grande Communications Networks (Grande) and NextEra FiberNet (NEFN) filed an application with the FCC seeking approval to transfer control of certain assets and customer contracts from Grande to NEFN. Financial terms of the transaction were not disclosed.
Among the assets to be transferred are assets related to the operation of Grande’s regional long-haul broadband transport business in Texas, Arkansas, Louisiana and Oklahoma, fiber networks, and certain resold interstate circuits in those states, as well as customer contracts for primarily wholesale carrier customers and a limited number of retail end users.
NEFN is a wholly owned subsidiary of FPL Group Capital, which is itself wholly owned by NextEra Energy (NYSE:NEE). NextEra Energy is a clean energy company with more than 15,000 employees in 28 states and Canada. Through its subsidiaries—NextEra Energy Resources and Florida Power & Light Company—the company uses natural gas, nuclear, wind and other renewable resources to generate electricity, with nearly 43,000 megawatts of generating capacity. NextEra Energy also owns FPL FiberNet, a competitive LEC that provides wholesale and enterprise telecommunications services in Florida and Atlanta, Ga.
JSICA Observations: Grande is in the process of building a fiber optic network in Texas, and judging by the company’s website, the company is shedding “non-core” wholesale assets in order to focus on serving residential and business customers.
NextEra Energy already owns fiber assets in Florida and Georgia (through subsidiary FPL)—which it leases to telephone, wireless, Internet and other telecommunications companies—and this deal represents a doubling-down of its investment. NextEra promotes itself as “America’s top producer of energy from the wind and the sun,” and prides itself on being a “clean-energy company.” Purchasing the fiber assets from Grande may be a precursor to entering the smart grid arena.
In other competitive LEC news, DISH Network (Nasdaq:DISH) subsidiary DISH Media is seeking approval from the FCC to acquire control of Denver, Colo.-based Liberty-Bell Telecom for an undisclosed sum. Pursuant to the terms of the deal, DISH will purchase shares and acquire majority ownership and control of Liberty-Bell, including the right to appoint a majority of the board of managers, 90% of the equity interests, and 93.1% of the voting interests in Liberty-Bell. Liberty-Bell provides competitive LEC and long-distance services in Colorado, and has limited operations in New Mexico and Utah.
Finally, EarthLink (Nasdaq:ELNK) announced on December 8, 2010 it has completed its acquisition of ITC^Deltacom (OTCBB:ITCD) in a transaction valued at $524m. This is another deal where fiber is the motivating factor— although ITCD is widely thought of as a CLEC, ELNK is primarily interested in the 16.4k mile fiber network. By acquiring ITCD, ELNK is transforming itself into an “IP infrastructure and services company” focused more on business and enterprise customers and less on its historical residential customer base.