Cincinnati Bell to buy telcos for $851M

new york — Cincinnati Bell agreed to buy Hawaiian Telcom Holdco for $650 million and OnX Enterprise Solutions for $201 million as the Midwestern landline carrier becomes the latest of its peers to expand fiber networks as a way to sell more data services.

Cincinnati Bell will pay about 60 per cent cash and 40 per cent stock for Honolulu-based Hawaiian Telcom, while Toronto-based OnX will be bought with cash, according to the agreements. The combined company will have 14,000 route miles of fiber and access to an undersea cable connecting with Asia.

For the past decade, US landline phone companies have lost customers to wireless providers and cable companies. This has created a rush by carriers like Cincinnati Bell, CenturyLink and Windstream Holdings to consolidate with an eye on amassing greater fiber-optic network capacity. These buried cables are expected to be the vital infrastructure needed to meet surging demand from businesses putting more data on the cloud, consumers streaming more videos and wireless carriers handling more traffic with new fifth-generation, or 5G, networks in the coming years.

“Our focus for the past several years has been investing in fiber,” Leigh Fox, Cincinnati Bell’s CEO, said. “We have a dense local fiber network but we were only growing slowly outside Cincinnati. With Hawaii and OnX, we’re creating a national player.”

Cincinnati Bell’s revenue rose about 1.5 per cent last year to $1.19 billion while Hawaiian Telcom’s stalled at $393 million.

Both are predicted to see revenue fall by about three per cent this year, according to estimates compiled by Bloomberg.