Effect of Iowa Telecom deal still uncertain
The ultimate effect of the sale of Iowa Telecom to Arkansas-based Windstream Corporation remains uncertain one day after news of a pending deal broke. What those close to the deal are saying indicates the most likely outcome includes the expansion of the Newton call center coupled with the restructuring of some redundant positions once the companies integrate in 2010.
Officials with Newton-based Iowa Telecom announced Tuesday that the company would be purchased by Windstream in a $1.1 billion deal likely to be completed by mid-2010. News of the sale came as a surprise to some community leaders, though most still were taking a wait-and-see approach to the purchase.
“It’s obviously going to be a change and a change that we don’t know the ramifications of yet,” JEDCO’s Craig Hamilton said. “It’s probably not the greatest news in the world, but it’s probably not worth crying about yet.”
“The uncertainty that comes right after the announcement of such a significant business event is normal and hopefully will be resolved as answers to questions become available,” Newton City Administrator Tom Wardow said in a statement. “We look forward to Windstream Corporation becoming a community member, and we are certain that Windstream Corporation will find the quality workforce here in Newton as an asset to their continued expansion.”
Windstream already has indicated the company plans to not only retain but expand the Newton call center, which likely would mean new jobs in Jasper County. However, a Windstream executive also indicated that the merger would create some duplicate positions for the company.
“We’ll be going through the integration plan to determine where we’ve got redundancies,” Windstream Chief Operating Officer Brent Whittington said, noting that in deals like this, redundancies typically fall into shared corporate services like accounting, marketing and human resources areas.
In addition to determining how to integrate the two companies’ workforces, Windstream will have to determine how to best utilize the Newton facilities once the purchase is complete. Iowa Telecom acquired the former Maytag Corporate headquarters after that company was purchased by Whirlpool and promptly moved their corporate headquarters their. Windstream will not take the same approach.
“We’re still working on that,” Whittington said, “Our corporate headquarters is here in Little Rock and we don’t have any plans to change that.”
Rather than moving here, Whittingon said the company would continue partnering with local officials to find a use for the former Maytag properties. Whittington also indicated Winstream would honor Iowa Telecom’s agreement with Caleris, a company currently leasing space in the facility for a calling center of its own.
Iowa Telecom Chairman and CEO Alan Wells indicated Tuesday evening that the board of directors strongly considered how the facility and employees would be used by a purchaser before agreeing to the sale. He said the deal came about in part because of a growing number of customers abandoning their land lines and moving to cell phones. Iowa Telecom needed to grow to remain competitive in the changing marketplace.
“We’ve seen a number of customers drop their land lines for just cellular service,” Wells said. “We came to the conclusion that we need to be a whole lot bigger.”
With Windstream, Iowa Telecom joins a telecommunications company with presence in 16 states, 2.9 million access lines, 7,300 employees and about $3 billion in annual revenue. In comparison, Iowa Telecom has 800 employees and about 256,000 access lines. As part of the sale, Wells will join the board of directors for Windstorm, but he said he and his family have no plans to leave the area following completion of the deal.
Wells described the mood at Iowa Telecom on Tuesday as “somber” and “reflective” as people absorbed the news. Iowa Telecom spokesman Dan Eness indicated many employees were still processing the news Tuesday, but that little would change until the deal formally closes next year and integration begins.
“Until the acquisition is approved, it’s business as usual here at Iowa Telecom,” he said. “Once the sale is approved we’re going to work tirelessly so the changeover is seamless and customer service isn’t interrupted.”
Andy Karr can be contacted at 792-3121 ext. 434 or via e-mail at akarr@newtondailynews.com.
