January 19, 2004

Consolidated Buys Texas Firm

MATTOON -- Consolidated Communications will triple its business base with a $527 million purchase of a Texas telecommunications firm. The deal also means new jobs in the future for Central Illinois .

"We're acquiring a company two times our size and tripling the size of our company," said Richard Lumpkin, chairman of Consolidated Communications Inc., Friday.

TXU Corp. announced Friday it agreed to sell TXU Communications, its southeast Texas telecommunications to Mattoon-based Consolidated for $524 million, plus $3 million of assumed debt. TXU is an energy firm with operations in North America and Australia that announced its intentions last May to sell its telecom operations to repay debt, according to a Dow Jones/Associated Press report.

The deal must be approved by the Federal Communication Commission and the Hart-Scott-Rodino review. Company executives expect to close the deal sometime this spring.

The good news for Central Illinois is the sale will produce new jobs in the long run for Coles County , according to Bob Currey, president and CEO of Consolidated Communications. The acquisition will make Consolidated stronger and that will offer more opportunities for growth, resulting in new jobs in the near future, he explained.

"It's too early to offer numbers, but that will be sorted out in coming months. But there will definitely be job growth in Central Illinois with this acquisition," Currey said.

Job growth has already occurred since Consolidated changed ownership about one year ago from McCleod. The change brought Richard Lumpkin back as Consolidated chairman, plus investors, Providence Equity Partners and Spectrum Equity Investors.

"We have added 100 jobs in Coles County during the past 12 months," Lumpkin said.

More importantly, the acquisition means Coles County will remain the home base for Consolidated, which traces its roots back to the Mattoon Telephone Company that opened in 1894. Over the past 60 years, Consolidated has drawn in other small-town telephone companies, and expanded its operations with technological advances in telecommunications and telemarketing over the past 30 years.

"There has been a constant evolution of telecommunication technology within our company," Lumpkin said. "We're constantly upgrading."

And that describes the current condition of the telecommunications industry. Many firms are becoming more diverse to better serve the needs of residential and commercial customers, large and small, through technology and marketing packages. Larger companies like TXU are divesting their rural communications properties, and that opens the door for expansion to companies like Consolidated.

"For us, we're focused on the rural areas," Currey said.

Consolidated executives also saw a similarity in its operations to TXU Communications. The Texas company employs more than 600 employees, while Consolidated has about 1,000. TXU has 168,000 business and residential customers in the communities of Lufkin , Conroe and Fort Bend , while Consolidated has about 90,000 customer lines in several counties in Central Illinois .

"With the sale of TXU Communications, TXU continues its focus on core energy businesses in Texas and Australia . We're pleased with the strategic fit of TXU Communications and Consolidated Communications, two respected regional telecommunications companies with strong commitments to customers and employees," said Erle Nye, chairman and chief executive of TXU.

Does this sale mean Consolidated will be more national than regional in the future? Currey said Consolidated already operates nationally with operator and telemarketer businesses. He predicts that the company will finish up the TXU sale and consider what the market has to offer in the future.

"There will be a little bit of a pause and then we will look at other acquisition possibilities and grow prudently," he said.

Contact Herb Meeker at hmeeker@jg-tc.com or 238-6869