Entries in EATEL (3)


Vision Purchase Complete, Helping EATEL Achieve Expansion Goals  

New Opportunities in Services and Territory for Louisiana RLEC

The sale of BV Investment Partners’ Vision Communications to Gonzales, Louisiana-based RLEC EATEL, announced in September 2011, wrapped up last week. EATEL, under president and vice chairman John D. Scanlan, looks to gain new customers, expanded service area, and a plethora of communications services from the deal. According to the BV Investment Partners press release on the deal closure, “Vision provides a comprehensive suite of residential and commercial services, including digital video, high-speed Internet, local and long distance telephone, alarm monitoring, and commercial data services.” Add this to EATEL’s extensive100%  FTTH network, FiberEdge, and EATEL appears well-poised for a competitive advantage in its new and existing Southern Louisiana service areas.

Vision and EATEL have long-standing histories in rural Louisiana, as both were founded to bring service to areas not seen as profitable by the Bell system. Vision (formerly SJI, LLC) was founded in 1945 and family-owned until 2007 when it was sold to BV Investment Partners; and EATEL, also family-owned, dates back to 1935 and “has earned a reputation as a communications pioneer.” Despite humble beginnings, both companies grew throughout the generations, continually innovated and added infrastructure—EATEL claims to have started one of the first 100% FTTH networks in the country, and both companies were early entrants in other advanced services.

When JSI Capital Advisors first reported this deal in September, we estimated a value of $11-12m. Since financial information about the deal has not been made public, our rough estimate was based on access lines. Our Phone Lines 2011 lists 10,156 access lines and 1,710 broadband lines for Vision and 28,854 access lines and 11,542 broadband lines for EATEL in 2010. The deal appears to add a nice-sized chunk of access lines to EATEL’s holdings, but JSI Capital Advisors also noted that Vision experienced an unusually high annual line loss of 9% (The Deal Advisor: EATEL to Acquire Vision Communications).

Given rampant line loss throughout the market, it is unlikely that any RLEC deal is going to be based solely on adding new telephone subscribers, so the purchase of Vision presumably is providing a strategic advantage for EATEL. It appears as though the deal will add new services and territory as well as potential opportunities for future growth for EATEL. The service areas, although not directly adjacent, are relatively comparable in size and both located in Southern Louisiana. Although rural, the respective service areas are also close to Baton Rouge (EATEL’s) and New Orleans (Vision’s). One can make the argument that an RLEC located in close proximity to an urban/suburban hub is fairly attractive in terms of opportunities for population growth and new business.

EATEL also appears to be experiencing a “just go for it” moment as Vision is not their only expansion project right now. EATEL’s website shares one of the company’s key objectives: “Grow the customer base and market area through planned expansion by market segment and by geography.” The Vision deal may help EATEL achieve the geography component, but EATEL is hoping to edge into the 4G wireless market through a partnership with LightSquared.

Following in its footsteps of being one of the first 100% FTTH providers, EATEL was also the first RLEC to partner with LightSquared. According to LightSquared’s press release announcing the partnership on November 28, “This agreement will allow EATEL, an Incumbent Local Exchange Carrier, to provide its customers with a world-class broadband service that competes on price and quality with any wireless carrier in the nation.” EATEL ceo Arthur “Smokey” Scanlan commented that “LightSquared’s unique ability to offer both broadband and satellite connectivity over the same device will be a breakthrough product for our customers.” Of course, approval for LightSquared’s extensive 4G service is pending approval, but this has not stopped multiple carriers of all shapes and sizes from entering partnerships with the wholesale 4G/satellite provider whose mission is “to revolutionize the U.S. wireless industry.”

LightSquared uncertainty aside, EATEL appears to be determined to forge ahead in achieving its growth objectives in both service territory and market segments. Coming at the end of a year with only 6 ILEC deals, the EATEL-Vision deal may prove to be a sign of a turn-around in this market as companies begin to have some closure regarding regulatory issues and realize that it will take more than simply keeping the lights on to be attractive to potential buyers.


EATEL to Acquire Vision Communications

Deal Includes Nearly 12K Connections


Boston-based BV Investment Partners announced September 20 that it has agreed to sell La Rose, Louisiana-based Vision Communications to Gonzales, Louisiana-based EATEL. Financial terms were not disclosed. BV acquired Vision (formerly known as SJI and parent of Lafourche Telephone and Lafourche Long Distance) from the founding Brady family in late 2007.

According to Phone Lines 2011, Vision Communications had 10,156 access lines at the end of 2010 and another 1,710 DSL connections in Larose, Grand Isle, Golden Meadow, Leeville, and Galliano, Louisiana. That’s down from more than 13k access lines at the time of the sale to BV—implying an annual line loss rate of nearly 9%, well above the 3%-5% annual declines many smaller ILECs have experienced in recent years.

At around $1,000 per connection, the deal value would be in the $11-$12m range—although the public ILECs trade for anywhere from $500 to $3,000 per connection, so that’s a rough estimate at best. Given the hefty line losses and low broadband penetration, the value may have come in lower.

EATEL, which began building its FTTH network in 2004 in the Ascension and Livingston Parishes, describes its network as “one of the only 100% fiber-to-the-home networks in the country.” Its FiberEdge service provides broadband speeds up to 60 Mbps as well as digital video and voice service. Clearly, the company sees its upside in expanding that service in to the nearby Vision market areas to improve broadband penetration.

EATEL is run by third generation family member John D. Scanlan, who was appointed president in 1994 and vice chairman earlier this year.


ILEC DEALS: Cameron Communications

American Broadband to Buy Louisiana RLEC

Charlotte, N.C.-based American Broadband Communications (ABB) announced that it has entered into an agreement to acquire Sulphur, La.-based Cameron Communications, LLC from the William L. Henning, Sr. family.  Cameron serves approximately 8,500 ILEC lines, 2,500 CLEC lines, 7,000 video customers, and 7,400 broadband customers in thirteen communities in southwest and central Louisiana and northeast Texas.  Cameron’s operations include Cameron Telephone, Elizabeth Telephone and LBH, LLC, which operates a fiber-to-the-home network in rural areas of southwest Louisiana.  Financial terms of the transaction were not disclosed. 

‘We are proud to have the opportunity to carry the legacy of excellence instilled in this organization by [William L. Henning, Sr.] over the last 60 years,” said ABB president and ceo Patrick L. Eudy.  “The Henning family developed a very talented team and had the foresight to plan, finance and build a network that delivers the highest-quality services to Cameron Communications’ customers.”

George J. Mack, president and general manager of Cameron Communications LLC will continue in his leadership role.  The company’s operations will continue to be managed from Cameron’s Sulphur, Louisiana headquarters. 

JSICA Observations:  ABB’s Pat Eudy, who cut his teeth on the RLEC industry under the tutelage of former Fairpoint Communications chairman and ceo Gene Johnson, continues in his quest to build MJD II.  He’s even teamed up with John Duda, former president and coo of MJD Communications turned Fairpoint and now executive vp and coo of ABB. 

The Cameron acquisition will represent ABB’s fourth RLEC cluster, the others being in Nebraska, Missouri and Alaska.  According to Phone Lines 2010, ABB served 23,951 ILEC access lines as of the end of 2009, the 53rd largest ILEC in terms of consolidated ILEC lines.  The roughly 8,500 ILEC lines served by Cameron will catapult ABB to the number 34 on our list, just ahead of the 31,965 ILEC lines served by another Bayou State RLEC – EATEL. 

Cameron Telephone Company was founded by William T. Henning in 1928 and at that time served 50 access lines in rural Louisiana.  Today the company serves approximately 25,000 voice, video and data connections over a 2,439 route-mile fiber and copper network that covers a 2,378 square mile service area. 

Pat Eudy has built ABB based on “strategic investments in rural communications companies designed to invigorate both the companies and the areas they serve.” ABB’s operating telcos “partner in the growth and economic vitality of their communities by providing broadband and other advanced services and by contributing to and supporting new business activity and job growth.”