Regions Southwest Virginia

Sunset Digital makes a $50 million offer to buy OptiNet Division from BVU

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Print this page By Paula C. Squires

Sunset Digital Communications Inc. in Duffield wants to buy the OptiNet Division of Bristol Virginia Utilities Authority (BVU) for $50 million in a transaction that has been approved by BVU’s board of directors.

Paul Elswick, Sunset’s CEO, said in an interview that his company’s unsolicited offer, if approved by various regulatory agencies, would benefit both parties.
The deal would pay off all of the OptiNet division’s debt, he said, while positioning Sunset to expand high-speed broadband to many of the region’s rural customers.

Sunset Digital, which currently serves about, 2,300 customers, would pick up 13,500 more and nearly double the geographic area it serves. The company plans to provide last-mile broadband fiber to another 14,000 customers in rural areas during the next five years.

Elswick  said that, in some of those areas, the only Internet service now is dial-up, which is much slower than the megabit-per-second service his company provides via one-year contracts for prices ranging from $49.95 to $99.99 a month, depending on speed. The company does not charge for installation.

“Sunset Digital intends to continue to bring excellent service to current OptiNet and Sunset Digital customers,” said Elswick. The growth potential of the region would not be constrained with an active network, he added. “With the new economy, there would be more producers from home. That’s a strong asset for the community in terms of economic development.”

Elswick and his son, Sunset Digital’s co-founder, Ryan, approached BVU CEO Don Bowman several months ago, expressing interest in purchasing the OptiNet Division. The agreement includes the assets of the broadband system. Sunset Digital said it would honor government grants used for the construction of the OptiNet network. As part of the agreement, Sunset Digital will lease the current BVU office facility located on Lee Highway in Bristol, Va.

“The agreement must be reviewed by governmental bodies and may take several months to complete,” Ryan Elswick said. He noted that Sunset typically focuses on offering service in areas that are rural, served by electric co-ops or are low-income, where federal grants can be used to extend service.

Jeff Mitchell, a lawyer representing the company, said the deal must be approved by 40 to 50 agencies, including some, such as the state’s tobacco commission, that have invested in the existing fiber system. He thinks the transaction could be approved by June. “They were a willing seller,” he said of OptiNet. “It wasn’t a fire sale.”

Sunset Digital does not foresee layoffs if the agreement is finalized.  The company currently has about 30 employees and expects to pick up about 75 to 80 of OptiNet employees, said Paul Elswick.  “They contracted out all their engineering. We do our own, so we will have to expand and scale up,” he said.

For current OptiNet customers, no rate increase in services is expected in the wake of the transaction. “If you are a current OptiNet or Sunset Digital customer, there will be no significant change in rates or service quality,” said Paul Elswick .

“Both Sunset Digital and OptiNet were created by the foresight of the Virginia General Assembly and the formation of the Virginia Tobacco Commission,” he said.  “Their vision was to transform Southwest Virginia from a tobacco economy to one built on the future. The agreement is the next step in realizing that vision.”

The family-owned and operated Sunset Digital serves Lee, Wise and Scott counties, the city of Norton in Virginia, and Hancock and Claiborne counties in Tennessee, as well as business customers in the Tri-Cities area.
BVU’s OptiNet currently serves customers in Southwest Virginia and Bristol, Va.

While the agreement is under review, Sunset Digital said it would expand its website to answer questions about the transition.

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