Nelnet NNI today
announced it has agreed to acquire ALLO Communications, a Nebraska-based
telecommunications company offering pure fiber optic service to homes and
businesses for superior broadband, internet, television, local telephone,
and long distance services. The transaction is expected to close in the
fourth quarter of 2015, subject to normal regulatory approval and closing
conditions.
ALLO specializes in ultra-fast internet services that are currently
available to less than 10 percent of homes across the country. ALLO's
all-fiber network allows access to internet speeds of one gigabit per second
(about 100 times faster than standard broadband connections), providing a
completely different experience for users.
"We are excited to team up with ALLO to support their rapid growth plans and
diversify Nelnet into a new operating business," said Jeff Noordhoek,
Nelnet's Chief Executive Officer. "ALLO shares our commitment to delivering
an exceptional customer experience with great service and best-in-class
technology. Bringing fiber with ultra-fast internet to communities
revolutionizes 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 operating
business with recurring revenue and strong management. The strategic
investment further diversifies Nelnet's revenue outside of education and
supports the company's focus on long-term value creation.
Founded in Imperial, Nebraska, ALLO was formed in 2003, and currently
provides world-class communications services by creating gigabit
communities. In 2004, ALLO began building a state-of-the-art fiber network
in two Nebraska communities, and today provides gigabit fiber to homes and
businesses in Scottsbluff, Gering, Bridgeport, North Platte, Ogallala, and
Alliance.
"Our fiber to the premise service is a real game changer, enhancing how we
live 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 network
and enjoy the fastest speeds for downloading music and movies, video
chatting, sharing photos, homework, and playing online games."
"Nelnet is a great fit for ALLO, with its Nebraska roots, financial
strength, and customer focus. Together, we look forward to expanding our
leading technology and providing the benefit of fiber internet speeds to
more 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 92.5
percent of the outstanding equity and membership interests of ALLO. The
remaining 7.5 percent of the equity and membership interests of ALLO will be
owned by ALLO management, who will also have the opportunity to earn
additional equity based on the performance of the company.
For the year ended December 31, 2014, ALLO had revenue of $12.2 million, an
increase of 30 percent from the prior year. Earnings before interest, taxes,
depreciation, and amortization (EBITDA) doubled during the same time period
to $2.9 million. Nelnet anticipates investing significant capital to
continue expanding the ALLO fiber network in existing service areas and in
other communities.
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