MediaOne Group has agreed to sell its remaining interest in
a fiber optic network that supplies telephone service to businesses in Richmond, Va., and
Jacksonville, Fla., to Hyperion Communications Inc., the telephony arm of Adelphia
Communications Corp., for $82 million.
Hyperion had owned 37 percent of the Jacksonville
partnership and 20 percent of the Richmond partnership, the company said. Hyperion and
MediaOne first formed the partnership in 1992, to provide local dialtone, long-distance,
dedicated-access and data services to business customers.
The Jacksonville and Richmond networks include about 1,000
route miles of fiber optic cable. The transaction is expected to close early next year,
pending state regulatory approval.
MediaOne said the sale fits with its strategy to
concentrate on offering telephony to residential customers.
"Because of the geography, it seemed like a good fit
for both companies," said David Wood, a spokesman for MediaOne. "It allows us to
off-load something that we are not involved in."
MediaOne, based in Englewood, Colo., provides cable service
to about 5.1 million subscribers. The company has begun rolling out a residential
telephony service, called "MediaOne Digital Telephone," to customers in Atlanta;
Los Angeles; Pompano Beach, Fla.; and six communities in Massachusetts. The company plans
to have residential telephony offerings in the majority of its markets by the end of 2000.
Hyperion, a unit of Coudersport, Pa.-based Adelphia, has
mainly concentrated on business customers for telephony service. The company currently
offers telecommunications services to about 3,500 businesses in the eastern United States.
This is the 12th such deal in the past two years for
Hyperion. In February, the company paid $44.3 million for the remaining partnership
interest held by a subsidiary of Tele-Communications Inc. for networks in Buffalo, N.Y.;
Louisville and Lexington, Ky.; and Morristown and New Brunswick, N.J.
Ed Babcock, vice president of finance for Hyperion, said
the company's other telecommunications partnerships include networks in Philadelphia
(with PECO Energy); in Baton Rouge, La., Little Rock, Ark., and Jackson, Miss. (with
Entergy Corp.); and smaller partnerships in Wichita, Kan., and York, Pa.
Babcock said the company is in discussions with a few of
those partners to buy out their interests, adding that at least one deal could be
announced in a few months.
The MediaOne deal increases Hyperion's ownership in
the networks that it manages to roughly 90 percent
Hyperion operates 20 networks serving 46 geographic areas
in the eastern third of the United States. The company is constructing a superregional,
fully redundant, fiber optic network by connecting its existing facilities with more than
50 new markets. Hyperion expects to spend about $460 million on the network through 1999.