A New Era in ILEC Transfers: How to Safeguard
Wireline Telecom Service
Originally broadcast on Thursday, December 10, 2009
The nation’s second-largest ILEC is seeking approval to transfer wireline assets
and operations in eighteen states to buyers that have very different financial,
managerial, and operational profiles. These transfers are unlike earlier ILEC
sales that involved a relatively small group of rural exchanges, as well as the
large ILEC mergers that happened in the decade following the passage of the
Federal Telecommunications Act of 1996. As a result, they raise new concerns
that require careful regulatory scrutiny.
To protect the public interest, regulators must address whether the terms of
these transfers convey assets at a fair value, whether the assets are sufficient
to form the foundation for a financially successful business, whether the terms
of the agreement ensure a smooth operational transition from the existing
provider to the new ILEC, and whether the capital structure of the acquiring
company is stable and viable.
Find out how regulators can identify the primary areas of concern, ask the right
questions, and, ultimately, make decisions about these sales that are in the
public’s best interest when you purchase the CD for this comprehensive new
teleseminar, which was originally held on December 10, 2009.
Recent sales of state local exchange operations by large ILECs are different
from prior transactions in several important ways:
- In some cases, the parent company’s entire operations in one state are
being transferred, which could result in a broader geographic and economic
impact than transactions involving fewer isolated communities.
- The buyer is considerably smaller—in size, scope, financial strength,
and managerial experience—than the seller.
- On occasion, the assets, customers, services, and geographic markets to
be divested exclude the highest-margin, highest-revenue, and fastest-growing
components of the (pre-divestiture) ILEC’s operations, thereby reducing the
purchaser’s revenue, profit, and growth opportunities.
Transactions often involve a significant increase in overall leverage (i.e.,
debt-to-equity ratio) by the purchaser, requiring commitments to large new-debt
financing and debt service and leaving the purchaser in a substantially weaker
financial condition than the seller was in with the same assets.
Helen Golding starts the program with an overview of her recent paper on ILEC
transfers. Then listen as our panel of speakers provides its expert assessment
of the role regulation plays in helping ensure that ILECs continue to provide
wireline local exchange and exchange access services in a manner consistent with
the public interest.
Here are some of the questions you’ll get answers to when you listen to the
CD of this event:
- To what extent do the private interests of these transactions diverge
from the public interest? And when they do deviate, what role must
regulation play?
- What primary areas require regulatory review?
- What processes can regulators employ to create the factual records
necessary to serve the public interest?
- What are the commission’s options if a proposed transfer raises
public-interest concerns?
…and more!
Get the details you need to help analyze these types of transactions, develop
regulatory proposals that are aligned with the public interest, and participate
effectively in these proceedings when you purchase the CD of the latest NRRI
teleseminar, “A New Era in ILEC Transfers: How to Safeguard Wireline Telecom
Service” which originally aired on Thursday, December 10, 2009.
Seminar panel of experts:
Helen Golding, Vice President, Economics and Technology, Inc.
Geoffrey Why, Commissioner, Massachusetts Department of
Telecommunications and Cable
Robert H. Mayer, Vice President, Industry and State Affairs, USTelecom
Association
Scott Hempling (moderator), Executive Director, NRRI
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