UPDATE: Nelnet to Acquire ALLO Communications

Nelnet (NYSE: NNI) todayannounced it has agreed to acquire ALLO Communications, a Nebraska-basedtelecommunications company offering pure fiber optic service to homes andbusinesses for superior broadband, internet, television, local telephone,and long distance services. The transaction is expected to close in thefourth quarter of 2015, subject to normal regulatory approval and closingconditions. ALLO specializes in ultra-fast internet services that are currentlyavailable to less than 10 percent of homes across the country. ALLO'sall-fiber network allows access to internet speeds of one gigabit per second(about 100 times faster than standard broadband connections), providing acompletely different experience for users. "We are excited to team up with ALLO to support their rapid growth plans anddiversify Nelnet into a new operating business," said Jeff Noordhoek,Nelnet's Chief Executive Officer. "ALLO shares our commitment to deliveringan exceptional customer experience with great service and best-in-classtechnology. Bringing fiber with ultra-fast internet to communitiesrevolutionizes the experiences of families, start-ups, and small businesses,making them immediately competitive in a digital, connected world." The acquisition of ALLO leverages Nelnet's financial strength and liquidity,infrastructure, and customer service capabilities in a growing operatingbusiness with recurring revenue and strong management. The strategicinvestment further diversifies Nelnet's revenue outside of education andsupports the company's focus on long-term value creation. Founded in Imperial, Nebraska, ALLO was formed in 2003, and currentlyprovides world-class communications services by creating gigabitcommunities. In 2004, ALLO began building a state-of-the-art fiber networkin two Nebraska communities, and today provides gigabit fiber to homes andbusinesses in Scottsbluff, Gering, Bridgeport, North Platte, Ogallala, andAlliance. "Our fiber to the premise service is a real game changer, enhancing how welive at home and work," said Brad Moline, President of ALLO Communications."For businesses, ALLO provides dependable bandwidth and telephone solutions.With ALLO's fiber, families are able to connect more devices to the networkand enjoy the fastest speeds for downloading music and movies, videochatting, sharing photos, homework, and playing online games." "Nelnet is a great fit for ALLO, with its Nebraska roots, financialstrength, and customer focus. Together, we look forward to expanding ourleading technology and providing the benefit of fiber internet speeds tomore communities in Nebraska, as well as surrounding states." ALLO will become a subsidiary of Nelnet and retain its brand identity.Moline and Jeff Kuenne, Executive Vice President for Network Operations,will continue to lead ALLO and its more than 100 associates. Under the terms of the agreement, Nelnet will pay $46.25 million for 92.5percent of the outstanding equity and membership interests of ALLO. Theremaining 7.5 percent of the equity and membership interests of ALLO will beowned by ALLO management, who will also have the opportunity to earnadditional equity based on the performance of the company. For the year ended December 31, 2014, ALLO had revenue of $12.2 million, anincrease of 30 percent from the prior year. Earnings before interest, taxes,depreciation, and amortization (EBITDA) doubled during the same time periodto $2.9 million. Nelnet anticipates investing significant capital tocontinue expanding the ALLO fiber network in existing service areas and inother communities.