SureWest Secures WIN's Sacramento Assets

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A U.S. Bankruptcy Court in Denver has approved SureWest Communications' bid to acquire "certain assets" in Sacramento, Calif., from overbuilder Western Integrated Networks LLC.

The Roseville, Calif.-based telco's $12 million offer was approved by the court after competitive bids failed to materialize. SureWest said the purchase would close July 12.

Another entity, Orange Broadband — backed by current WIN investors J.P. Morgan Chase, MC Venture Partners and Columbia Capital — obtained a license to serve Sacramento from regulators in that city, but never submitted a bid to counter SureWest's.

Court-appointed managers of the company, which does business as WINfirst in Sacramento, have told city regulators that the partially built, fiber-to-the-home system has nearly 5,000 customers. That would appear to put the purchase price at about $2,400 per subscriber.

But that doesn't begin to cover the costs WINfirst incurred just to build its local operations center — a reported $160 million.

James Vaughn, who cashed out of MSO FrontierVision Partners L.P., launched Western Integrated Networks LLC. However, Vaughn and former WIN president Frank Casazza are no longer with the company, now under the control of court-appointed chief restructuring officer William McKenzie.

WINfirst delivers bundled telephone, Internet and video services in the city of Sacramento. SureWest is a competitive local-exchange carrier that sells wireline and wireless phone and data services in an 83-square-mile territory in the Sacramento suburbs of Roseville, Citrus Heights, Granite Bay, Antelope and parts of Rocklin.

This is not the first time the telco has attempted to expand into the cable business. In 1998, it proposed a joint venture with either Jones Intercable Inc. or Scripps Howard Cable TV, but withdrew the application for a cross-ownership waiver. Executives cited 15 months of "foot-dragging" by the Federal Communications Commission as the reason for dropping the partnership plan.

SureWest officials said they would provide operational details after the deal officially closes. There is still no indication whether SureWest has aspirations beyond the Sacramento area.

In California's capital, SureWest will compete with AT&T Broadband, which intends to invest $27 million to upgrade its 375-mile network in Roseville, where it will begin deploying high-speed-data services by year-end.

Western Integrated Networks LLC has obtained franchises in other cities, including San Diego and Los Angeles.

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