Thursday, November 4, 2010

Windstream Builds Data Center Bulk with Acquisition of Hosted Solutions

Windstream will acquire Hosted Solutions Acquisition, LLC (Hosted Solutions) in an all-cash transaction valued at $310 million. The deal will expand Windstream's business offerings, increasing the scale and scope of its data centers by adding five state-of-the-art SAS 70 Type II certified data centers in Raleigh, N.C.; Charlotte, N.C., and Boston with a total of 68,000 square feet of data center capacity. As a result, Windstream will have a combined total of 12 data centers across the country.

Hosted Solutions is a leading regional data center and managed hosting provider focused on enterprise-class Infrastructure as a Service (IaaS) solutions (managed hosting, managed services, colocation, cloud computing and bandwidth) for small and medium-sized business customers as well as large enterprises. The company serves more than 600 customers, has approximately 125 employees, and is based in Raleigh, N.C.

"Data center space is increasingly in demand among our existing business customers," said Jeff Gardner, president and chief executive officer of Windstream. "Hosted Solutions is an excellent complement to our existing enterprise service portfolio. For the past decade, they have been delivering highly complex managed hosting solutions to customers of various sizes. In addition, they have a proven track record of growing revenue and generating significant free cash flow."

Separately, Windstream reported Q3 2010 revenues of $966 million, a 32 percent increase from a year ago. Net income was $85 million, a 7 percent increase from a year ago, or 18 cents of diluted earnings per share.

Some key metrics:

  • Windstream added approximately 15,700 new high-speed Internet customers during the third quarter, bringing its total customer base to approximately 1.29 million - an increase of 8 percent year-over-year. Overall broadband penetration is now 42 percent of total voice lines and 60 percent of primary residential lines.

  • Windstream also added more than 13,000 digital TV customers in the quarter, bringing its total customer base to approximately 433,000, or 22 percent penetration of primary residential lines.

  • Total access lines declined by approximately 30,700, resulting in a year-over-year decline of 3.7 percent. Total lines at the end of the quarter were 3.3 million.

  • In the business channel, advanced data and integrated solutions, which are largely connections providing both voice and data services, increased 1 percent year-over-year. Special access circuits were up 5 percent year-over-year due to increased bandwidth demand from wireless carriers.
  • In June 2010, Windstream completed its acquisition of Iowa Telecommunications Services, Inc. in a transaction valued at approximately $1.2 billion. As of March 31, 2010, Iowa Telecom provided service to approximately 249,000 access lines, 96,000 high-speed Internet customers and 27,500 digital TV customers in Iowa and Minnesota.