We are in an era of massive consolidation among Tier 2 telcos and rural LECs. The result of these moves is a Tier 2 market segment comprised of Qwest, Cincinnati Bell, CenturyTel, Fairpoint Communications, Frontier Communications, NTELOS, TDS Telecom and Windstream. Each spends over $100 million a year in capex.
Skyline Marketing Group has put together the following milestones:
- 2000: VALOR Telecom formed from acquired assets from GTE Southwest.
- 2002: Alltel purchases 600,000 lines in Kentucky from Verizon
- 2005: Alltel spins off its wireline business and merges with VALOR to form Windstream, with 3.4 million access lines in 16 states.
- 2005: CenturyTel sells its wireless operations to Alltel, becomes a pure ILEC.
- 2006: Frontier acquires Commonwealth Tel
- 2006: EMBARQ (formerly Sprint LTD) is spun off from Sprint-Nextel
- 2007: Consolidated Communications acquires North Pittsburgh Systems
- 2007: Windstream acquires CT Communications
- 2008: Fairpoint, itself formed from rural ILEC acquisitions, acquires 1.5 million lines in New England from Verizon
- 2008: CenturyTel acquires EMBARQ becoming the largest IOC with 7.5 million lines in 22 states, and creates a new company named CenturyLink.
- 2009: Windstream acquires D&E Communications
- 2009: Frontier acquires 4.8 million former GTE lines from Verizon to grow to 7 million lines in 27 states
The remaining IOCs also comprise some formidable metrics. Here are the numbers:
- Nearly 32 million switched access lines
- Close to 8.4 million broadband lines (incl. xDSL, FTTx, xPON)
- More than 17,000 CO switches (both circuit & packet)
- More than 72,000 DLC/NGDLC terminals (est. 35 percent fiber-fed)
- 413 AWS/700 MHz licenses (purchased for $1.3 billion)
- $30 billion revenue guidance for full-year 2009
- Almost $4.3 billion capex guidance for full-year 2009
“More importantly, unlike AT&T and Verizon, the Tier 2 carriers can qualify for the broadband stimulus funding that will be available later this year,” said John Celentano, president of Skyline Marketing Group. “The reordering of the IOC line-up and the rise of the Tier 2 telcos has significant, and strategic, implications and opportunities for competing service providers, equipment vendors and investors.”
