Unless you practice bankruptcy or white-collar defense law, it’s hard to take anything positive from 2002’s telecom meltdown.
But others have benefited. Companies that managed through the malaise are buying valuable network assets and customers (both at a national and regional level) from those who didn’t — and at bargain prices.
Today’s example is CenturyTel , of Monroe, La. The integrated communications provider has bid $38 million for the fiber-optic business of Digital Teleport, which sought Chapter 11 bankruptcy protection Dec. 31, 2001.
Other bidders have until Feb. 7 to up the offer. However, CenturyTel can match subsequent bids. The agreement also guarantees CenturyTel a break-up fee of approximately 2 percent of its original bid if it is trumped. A final auction is expected Feb. 10, with bankruptcy court approval following by Feb. 18.
Digital Teleport’s The network provides wholesale transport and Ethernet
That fits nicely with CenturyTel’s footprint. The company operates about 2 million telephone access lines, primarily rural, suburban and small urban markets in 21 states.
CenturyTel also provides long distance, Internet access, broadband data and security monitoring services. It is also the majority stakeholders in a cellular system.
For Digital Teleport, completion of the deal would be another step in its efforts to emerge from bankruptcy.
“Digital Teleport is attempting to achieve the highest return for our investors and the greatest recovery for our creditors,” said Paul Pierron, president and CEO.
He added that over the past year, Digital Teleport has managed to grow its year-over-year bandwitch revenue 43 percent and genrate positive operating income and cash flow.
CenturyTel’s opportunism mirrors that of several other telecoms. On a larger scale, Level 3 Communications recently took advantage of Genuity’s financial woes to buy network assets and customer contracts for $242 million. The deal also involved Woburn, Mass.-based Genuity to file Chapter 11 bankruptcy.