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The Commons
Business

Sovernet sale is completed

Private equity firm buys BF-based telecom company

Originally published in The Commons issue #401 (Wednesday, March 29, 2017).



BELLOWS FALLS—A private equity firm has finalized its acquisition of Sovernet Communications, a Bellows Falls company that maintains a fiber optic network stretching across Vermont and New York.

The sale to Oak Hill Capital Partners means that, in the not-too-distant future, the name “Sovernet” will cease to exist. That’s because Sovernet is merging with Albany, N.Y.-based FirstLight Fiber, an Oak Hill subsidiary.

But administrators with all three companies portrayed the changes as a step forward, saying customers will benefit from a larger, integrated telecommunications network.

And FirstLight spokeswoman Maura Mahoney said the company doesn’t expect the acquisition and merger to result in lost jobs at Sovernet.

“This is very much a growth story,” Mahoney said. “The intention is not to cut our way to success.”

Sovernet, founded in 1995, bills itself as “Vermont’s first and largest locally operated statewide competitive provider of residential and business telephone and Internet services.”

The company, which was sold to Massachusetts-based ATN International in 2006, took a big leap forward several years later through the construction of a $48 million, high-capacity fiber optic network reaching government offices, schools, health care facilities, and other locations.

Federal boost

The network was made possible by more than $33 million in funding from the federal stimulus program. In 2014, as Sovernet was putting the finishing touches on the fiber project, Chief Executive Officer Richard Kendall noted the serendipity of that federal allocation.

“We were at a point where we needed to build fiber to be competitive and sustainable, and the [stimulus] legislation couldn’t have come at a better time for us,” Kendall said.

Sovernet also grew with the 2008 acquisition of Albany, N.Y.-based ION, which maintains an extensive fiber optic network in New York.

Last summer, Oak Hill announced its intention to purchase Sovernet. It was just one of the steps the equity firm has taken to build a portfolio of companies specializing in high-speed data services.

Oak Hill bought FirstLight prior to disclosing the Sovernet agreement. And the firm in January announced the acquisition of Oxford Networks, a fiber optics company operating in Maine, New Hampshire, and Massachusetts.

Oak Hill executives at that time said the Oxford deal “represents an exciting next step in our plan to create the leading fiber provider in the Northeastern U.S.”

The network is expected to grow even bigger with FirstLight’s pending acquisition of Finger Lakes Technologies Group, which has a fiber optic network in New York and Pennsylvania.

Big expansion

FirstLight is absorbing Sovernet, Oxford, and Finger Lakes, resulting in a combined network that will soon cover 12,000 miles of high-capacity fiber optics, administrators said. That network will serve more than 7,000 locations and will include 12 data centers with more than 225,000 square feet of space.

Sovernet’s infrastructure provides a significant portion of that network. Oak Hill/FirstLight has obtained Sovernet’s 3,300 miles of fiber in New York and its 1,300 miles of fiber in Vermont, along with the company’s data center in Williston.

“The successful acquisition of Sovernet, which includes its New York ION network, substantially increases our fiber density and reach, allowing us to better serve our existing customers while expanding into new markets as well,” Kurt Van Wagenen, FirstLight’s president and chief executive officer, said March 14 in announcing the deal’s completion.

Van Wagenen added that he expects “a seamless integration in which our customers will quickly reap the benefits of our enhanced operating platform and capabilities.”

Retaining staffers

Kendall, in an accompanying statement, cited the “complementary networks and services” offered by Sovernet and FirstLight. He said the sale and merger “will benefit all our customers and provide exciting opportunities for our talented employees.”

Last year, Sovernet reported having 70 to 75 employees. In a March 14 interview, Mahoney said FirstLight is interested in retaining those staffers.

“We hope and expect that they will become part of our team,” she said.

Mahoney added that FirstLight Fiber already had a Vermont presence prior to the Sovernet deal.

“This combination really strengthens our capabilities,” she said, adding that FirstLight is “committed to continue to serve the needs of Vermont-based businesses and carriers.”

But that won’t happen under the Sovernet label. Mahoney said the company “will be rebranded to FirstLight over the coming months. There will be a number of customer/community outreach [efforts] to get the word out.”

One other change might be on the way.

FirstLight hasn’t committed to the long-term operation of Sovernet’s landline telephone services. As of last year, Sovernet reportedly was still providing that service to 17 communities.

“That will be an item that will be addressed during our integration efforts,” Mahoney said. “It’s too early to tell what the company may or may not do.”

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