Bellows Falls company to be purchased by private equity firm


ROCKINGHAM — One of Vermont's main telecommunications service providers, Sovernet Communications might soon have new owners.

"Sovernet has become a regional leader in high-capacity network transport, broadband Internet and voice services, but this transaction will allow us to do even more to serve our customers," stated Sovernet's President and CEO Richard Kendall in a press release. "We achieved much in 21 years through a combination of dedicated staff, constant reinvestment in the network and remarkable long-term customer relationships. All of these things will continue as we begin a new chapter with FirstLight, which shares our commitment to excellence and is ready to take us to new heights."

Sovernet Communications, a leading fiber-optic bandwidth infrastructure services provider operating in Vermont, New York and southwest New Hampshire, announced on Monday it will be owned by Oak Hill Capital Partners, based in New York, which is owned by Texas billionaire Robert Bass.

But the partnership goes beyond Oak Hill; the company plans to combine operations of Sovernet with FirstLight Fiber, another provider of fiber optic communications in the Northeast. Oak Hill publicly announced on Feb. 23, that it planned to acquire FirstLight and that transaction is expected to close by early 2017. This collaboration will link Sovernet's network transport, broadband internet and voice services with FirstLight's data, internet, data center and voice services.

Overall, Kendall told the Reformer this is the "right strategy" in order for Sovernet to continue to provide products and services for its customers. But as far as local impact after the transaction is made, Kendall said it is still too early in the preliminary stages for him to make a prediction as to what will happen to his position or Sovernet's physical location in Bellows Falls and elsewhere, or any other local changes that might occur.

"Right now it is early in the process," Kendall said. "I think it is favorable to how the combined entity will look after closing, but it is too early to predict what it will exactly look like."

Kendall noted that until the purchase is made, he will remain focused on Sovernet's customers and staff. He added that before the purchase is finalized, Sovernet and Oak Hill will work more closely to discuss the integration of the companies, including alignment, function, efficiency and combining aspects such as the billing and operational support systems.

He added that "multiple" other entities were interested in purchasing Sovernet, but Sovernet selected Oak Hill as its top pick, noting that the combined entity upon closing is going to be a "very strong" telecom company across New England and New York.

According to a press release issued Aug. 8, other transactions include FirstLight and Oxford Networks, totaling approximately 9,500 route miles of "high-capacity" fiber optic network and 11 data centers throughout New England and New York.

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Sovernet, founded 21 years ago and owned by Beverly, Mass.-based ATN International, made an announcement in its second-quarter financial results, stating that it "recently began a review of strategic alternatives for (its) U.S. wireline business in the Northeast." That was a subtle hint that the company was for sale, and that "alternative" was officially announced on Monday.

A wireline refers to a service that connects to a regular telephone network through a local loop of copper wire or glass fiber that terminates in a fixed location at a customer premises. A wireline service is in contrast to a wireless local loop and a wireless service such as cellular.

The second-quarter financial results further revealed that related to its U.S Telecom segment, revenues were down 7 percent from the second quarter in 2015. The report revealed other declines as well.

"U.S. wireless revenues declined 6 percent to $37.7 million compared with $40.1 million in the prior year quarter, due mostly to lower wholesale roaming rates, partially offset by growth in data traffic volume," stated ATN International's second-quarter financial results, which were released July 27. "U.S. wireline revenues were $5.8 million, down from the $6.7 million in the prior year due to a drop in our wholesale long-distance voice service revenue. "

However the company ended the second quarter of 2016 with 905 domestic base stations in service compared to 840 at the end of last year's second quarter.

"This is an exciting development for FirstLight Fiber. This acquisition is very complementary to FirstLight's existing network and capability," stated FirstLight Fiber's President and CEO Kurt Van Wagenen. "Once combined, our network will reach further into Vermont, New Hampshire and New York, allowing us to provide high quality, broadband, fiber-based services to more businesses and carriers located in this region."

Founded in 1995, Sovernet is a regional provider of data center, high-capacity network transport, broadband Internet and voice services throughout northern New England and New York. The company is headquartered in Bellows Falls with facilities in New York, Vermont and southwest New Hampshire.

FirstLight Fiber, headquartered in Albany, N.Y., provides fiber-optic data, internet, data center and voice services to enterprise and carrier customers in New York and Northern New England with connectivity to Canada.

Oak Hill is a private equity firm managing funds with more than $9 billion of initial capital commitments since inception from entrepreneurs, endowments, foundations, corporations, pension funds, and global financial institutions. Oak Hill invests in the following sectors: consumer, retail and distribution; industrials; media and communications; and services. Oak Hill works actively in partnership with management to implement strategic and operational initiatives to create franchise value.

Maddi Shaw can be reached at 802-254-2311 ext 275


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