Amtelecom expands reach by acquiring People’s Communications

Amtelecom Income Fund has expanded the reach of its incumbent telephone operations through the acquisition of fellow regional incumbent local exchange carrier (ILEC) People’s Communications Inc. The head of Amtelecom tells Network Letter that the combined entity is well-positioned to capitalize on future opportunities. "It’s a quality property," says Mike Andrews, president and CEO of Amtelecom. "Since the we’ve been promising investors growth through acquisition. Our interest is in telecom properties, and People’s presented a good opportunity for us." He notes that People’s has some added experience in the collocation and wireless game, which bodes well for the future. "They’re a little more progressive in , which we think will complement our business, but will actually give us a little bit of a different focus," says Andrews. "They’ve been in a little bit longer and have a little bit more experience under their belt, which we expect to certainly tap into, but for the most part the two businesses are quite complementary." Andrews says many of the synergies from which the combined operation will benefit come from a larger subscriber base, adding that People’s is in markets that Amtelecom isn’t. "While we’re closer to the city of London than People’s," he adds, "they’re very close to the Sarnia market." Amtelecom initially launched its bid for People’s in December when it offered $50 per share with a total acquisition price tag of $21.3 million. A December 6 news release unveiling the proposed acquisition noted that the offer represented a "significant premium" over People’s last known share price of $24. Less than two weeks before People’s shareholders were to vote on the proposed acquisition, Execulink Group entered the race to acquire the company. This sparked a two-week bidding war for the Forest ON-based incumbent telephone company, with each one-upping the other on an almost daily basis. In a January 8 news release, Execulink CEO Keith Stevens stated, "Execulink’s increased offer reconfirms our belief in the benefits of this acquisition. We look forward to a growing local presence providing a range of telecommunications services to the people of Lambton region." Ultimately, however, the Amtelecom bid of $60 per share on January 13 won out. People’s shareholders approved the transaction on January 17, which formally closed on January 24. The combination of the two independent regional ILECs will create a company with 11,000 local telephone service customers, 2,500 cable TV customers and approximately 55,000 Internet customers. People’s wasn’t Amtelecom’s closest neighbour; that distinction is reserved for Execulink Group. Asked whether Amtelecom might turn its attention to acquiring Execulink for yet another boost in future potential, Andrews says that isn’t necessarily the case. "But we’re always open to discussions, that’s for sure and always on the look out for strategic acquisitions," he says. There is also another added benefit to acquiring People’s, says Andrews. Amtelecom owns a number of small isolated cable systems southwest of London and the acquisition allows for the interconnection of those cable systems. "It’s never really presented a big business case," he says, adding that existing fibre can now be extended into the People’s operating territory, which will allow for cost effective cable system interconnection.

Amtelecom expands reach by acquiring People’s Communications

News | February 2, 2006

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