by James Heffernan
The gap between wireless communications and wireline services is closing, and for some regional telecommunications firms the two segments can become tangled.
“Where we overlap, there’s a lot of synergy. Where we don’t requires some compromise,” says James A. Hyde, CEO of nTelos. The Waynesboro-based telecommunications company plans to spin off its 113-year-old wireline business into a separate, publicly traded corporation later this year.
NTelos, which began as a rural telephone carrier in Clifton Forge, has been busy repositioning its wireline business from traditional voice access lines to high-bandwidth data products and services. The company acquired a 2,200-mile, fiber-optic network in Pennsylvania from Allegheny Communications in 2009 and another 3,500 route miles in five states from One Communications Corp. last year. The push has created a robust regional wireline unit to complement nTelos’ better-known retail wireless operations.
But the present arrangement also has led to problems. As a wholesale provider of broadband services in some areas, nTelos will lay fiber-optic cable, only to end up leasing some of the new network’s capacity to another telecom with whom it competes in wireless. “We have one of the richest and densest fiber-optic networks in Virginia and West Virginia, so we are the go-to carrier for the Verizon Wirelesses of the world,” Hyde says. “They’re one of our largest customers, but they’re also a competitor.”
By dividing nTelos’ operations, he says, each company will be better positioned to leverage its competitive strengths, manage its operations, pursue growth strategies and enhance shareholder value. “Both of these business units are very strong financially, with good management teams in place, so they function independently inside the four walls of nTelos,” Hyde says.
As of Sept. 30, the company’s wireline segment had revenues of about $214 million, while its branded wireless segment had 433,698 retail and wholesale subscribers and revenues of $406.4 million.
The convergence of wireless and wireline services presents opportunities for a growing company like nTelos, Hyde says. The evolution of smartphones and other wireless devices equipped with 3G and 4G speeds gives users a mobile broadband experience to rival DSL service. And as fiber-optic networks continue to penetrate rural areas, nTelos can bundle services such as high-speed Internet, digital voice and cable TV, as well as fiber-to-the-home technology.
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