Consolidated Communications is just what its name
implies. The rural local exchange carrier operates systems in
Illinois, Kansas, Missouri, Pennsylvania, Texas, and California,
providing voice and data telecommunications to business and
residential customers. It operates RLECs that offer local
access and long-distance, Internet and TV, business phone systems,
and related services through about 270,000 local access lines,
167,000 voice connections, and 290,000 data and Internet
connections. It also offers directory publishing and carrier
services. Subsidiaries include Illinois Consolidated Telephone
Company, Consolidated Communications of Fort Bend Company, and
Consolidated Communications of Texas Company.
Video, data and Internet services generate 45% of Consolidated's
revenue with local calling services and network access services
providing 17% each.
In its home base of Illinois (the headquarters is in Mattoon),
Consolidated operates 35 incumbent local exchanges serving
primarily small towns and rural areas, mostly in the central
part of the state. It also has operations in East Texas, western
Pennsylvania, around Sacramento, Calif., and around Kansas City in
Missouri and Kansas.
Sales and Marketing
Consolidated markets services individually and in bundles such
as the "triple-play" of voice, data and video services. The company
boosted its advertising spending to $8.2 million in 2014 from $7.6
million in 2013.
Consolidated reported revenue of $635.7 million for 2014, up
about 7% from $601.5 million in 2013. The acquisition of Enventis,
a MIinnesota telecom, lifted revenue. However, only video, data,
and Internet services posted a year-to-year revenue gain while
revenue from other segments fell.
Net income dropped 51% to $15 million in 2014 from $31 million
in 2013. Acquisitions were accompanied by higher operating costs,
which cut into net income as did depreciation and amortization
Cash from operations rose to $189 million in 2014 from $164
million in 2013 because of a change in working capital items.
One way to view Consolidated's strategy is to look at a map.
Starting in Illinois, the company has expanded to Pennsylvania,
Texas, Missouri and Kansas, and California, gobbling up similar
telecoms that serve small towns and rural areas. It's tweaking that
approach with its move to the Kansas City area and into the
Dallas-Fort Worth suburbs.
As the company's wireline business decreases (as it has with
most telecom companies), Consolidated is moving to add more
Internet, data, and video services to its lineup. The company is
expanding its services in a big way in the Dallas-Fort Worth area,
where it has 30,000 miles of fiber ready to light up with Internet
access, wide area networks and hosted iPBX for commercial customer.
The network had been used for wholesale and carrier customers.
Consolidated offers high-speed Internet service through fiber
optic lines in Kansas City and Conroe and Katy, Texas. The company
gained about 4,200 miles of fiber lines with its acquisition of
Eventis. Consolidate's capital expenditure budgets include money
for continued expansion of fiber in its service areas.
Consolidated also is expanding its services to provide carrier
hotel space and data center space in its markets and to support
fiber backhaul services to cell sites. It is to have nearly 700
cell tower sites completed by the end of 2014.
Mergers and Acquisitions
Acquisitions play a key role in Consolidated Communications
growth strategy, and the company continued in 2014 with a deal in
the upper Midwest. It bought Enventis, which has service in Iowa,
Minnesota, North Dakota, South Dakota, and Wisconsin, for about
$350 million. Enventis brings about 39,000 access lines, 21,000
high-speed Internet customers, 12,000 digital TV customers, and 90
fiber-to-the tower sites as well as $123 million in revenue.
In 2012, Consolidated bought SureWest Communications, a
provider of residential and commercial communications and broadband
services in the Sacramento, California and Kansas
City markets, in a deal valued at $324 million, excluding