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Knology Buys 25K Subs in Alabama

Knology, a cable overbuilder, said it purchased Dothan, Ala.-based telecommunications company Graceba Total Communications for about $75 million.

Graceba offers voice, video and high-speed data services to business and residential customers and has about 25,000 connections, according to Knology. According to a press release, Graceba expects to report 2007 revenue of $19.5 million and cash flow of about $10 million.

The acquisition will be funded through $16 million of Knology’s cash on hand and a $59 million term loan. Knology said that it has already obtained financing commitments for the term loan.

The Graceba transaction will fill in Knology’s Southeastern footprint and should be completed by the end of the first quarter.

This is the second small acquisition that Knology has made this year. In April, the overbuilder acquired PrairieWave Communications, a South Dakota-based operator with about 57,000 residential customers and 7,000 business customers Sioux Falls and Rapid City for about $255 million.

In a statement, Knology CEO Rodger Johnson compared the Graceba transaction to PrairieWave.

“Graceba is an acquisition similar to the PrairieWave transaction, although somewhat smaller, located within our existing Southeast footprint,” Johnson said in a statement. “The Graceba market has strong demographics and the business is delivering healthy operating and financial results. Similar to PrairieWave, Graceba is a very well-run organization with a Knology-like focus on customer service with a consistent business philosophy.”

Announcement of the deal came in conjunction with the release of Knology’s third-quarter financial results. In the period, Knology said that revenue rose 42% to $92.3 million in the period (up from $65.3 million in the prior year) and cash flow increased 66% to $28.7 million from $17.3 million in the same period last year.

Knology added a total of 12,545 net new connections in the period, ending the quarter with about 228,000 video connections, 230,000 voice connections and 173,000 high-speed Internet connections.