More consolidation and cost cutting in telco land. Last week, it was Century Link and Level 3. Today, Windstream and EarthLink. Apparently, it’s all about scale. The $1.1 billion (€993.82 million) all-stock deal is a move designed to boost the network service providers ability to compete with larger rivals -both telco’s and MSOs/cablecos.
Under the terms of the deal, Earthlink shareholders will receive 0.818 shares of Windstream for each Earthlink share. The new entity, which will retain the Windstream name, plans to shed $125 million in costs while holding 145,000 route miles of fiber in the Northeast and Southeast.
Windstream serves 1.06 million residential broadband customers, 138,500 small businesses, and 26,600 larger enterprise customers.
“The combination with EarthLink further advances Windstream’s strategy by creating a stronger, more competitive business to serve our customers while increasing free cash flow and reducing leverage,” said Tony Thomas, CEO of Windstream, in a statement. “With this transaction, we are combining two highly complementary organisations with closely aligned operating strategies and business unit structures,” he added.
“We are pleased to join forces with a company that shares our core values and operating philosophies, and whose strategy complements our own,” said EarthLink chief executive Joe Eazor. “In our work with Tony and his team, it’s become clear that we are two companies on parallel paths,” he said. “Now is the right time for us to come together.”
EarthLink currently operates two divisions: Business and Consumer.
- EarthLink Business sells communications, IT and virtualization, cloud computing, IT security, colocation, hosted applications and support services. The company owns and operates a U.S. network including 29,421 route miles of fiber, 90 metro fiber rings, and eight data centers. EarthLink Business has more than 150,000 customers.
- EarthLink’s Consumer division sells broadband (DSL/freestanding DSL, cable internet, 4G Internet, Satellite Internet) dial-up Internet, Web hosting and commerce, and related services. It also sells spamBlocker, Anti-virus and Online Back-up. Earthlink internet services claims to have over 1 million customers.
The merger is expected to generate annual synergies of $125 million within 36 months of the deal’s completion, which is expected to happen in the first half of 2017, subject to approval by the Federal Communications Commission (FCC), and customary closing conditions.
A joint presentation will be available at:
Editor’s Note: We remain SD-WAN skeptics due to no standards and hence no vendor or carrier interoperability.
The three primary drivers fo the ONUG Fall 2016 conference: Silo organization structure has run its course. It’s in our best interest to create a market for next generation analytics. Cloudification of technology is the tool to allow organization transformation.
SD-WAN grew out of the needs of attendees from the first ONUG meeting in 2012. Co-founder and ONUG Co-Chair Nick Lippis predicted that 2017 will be the year of SD-WAN.
Results of an ONUG Fall poll indicated that 50% of the ONUG Community are in limited to large-scale SDN deployment. In addition, 64% of the ONUG Community are already in the SD-WAN deployment stage. Of those piloting, 97% said they will move to the deployment phase within the coming year.
With the support of ONUG and others, the use case for SDN in the WAN evolved into its own industry. Led by companies like CloudGenix, Viptela, and VeloCloud, new opportunities arose to simplify the management of WAN connections between branches. Central controllers orchestrated the task of deployment to the point where anyone could connect the device via phone call instead of a plane ticket. Circuit configuration was no longer the stuff of days gone by and instead became something handled remotely by the best people.
SD-WAN also allowed more services to be built on top of traditional WANs. Now, traffic could be encrypted end-to-end. Analytics could provide solid numbers about traffic patterns, which could then be used to provide intelligent decisions about application routing patterns. And even the metrics collected could be used with service providers to ensure service level agreements (SLAs) were being met.
The conversations about SD-WAN on Day 1 weren’t so much about explaining how it works as they were about providing justification to start the proof-of-concept trials. ONUG constituents like Kindred Healthcare and Gap are quickly rolling out massive SD-WAN deployments to reduce costs and simplify management. The success stories of SD-WAN are highlighting the next wave of adoption in enterprises down the food chain.