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Telephone and Data Systems Buys Baja Broadband

TDS Telecom, a unit of telecom giant Telephone and Data Systems, has agreed to purchase cable operator Baja Broadband for $267.5 million, the companies announced Tuesday.

Baja, based in Alamogordo, N.M, has about 74,000 video customers, 56,000 high-speed data customers and 15,000 digital phone customers in Colorado, New Mexico, Texas and Utah. The company was formed in 2006 after private equity groups M/C Partners and Columbia Capital teamed up to purchase non-core systems from Charter Communications in New Mexico, Utah and Colorado. The company added to those assets in 2011 when it purchased the southwestern assets of US Cable.

New York boutique investment bank Waller Capital and RBC Capital Markets served as financial advisers to M/C Partners and Columbia Capital in the deal. RBC Capital Markets was the exclusive M&A adviser to Baja and Edwards Wildman Palmer LLP served as legal counsel to Baja.  

The deal is expected to close in the third quarter. According to a press release, Baja passes about 212,000 homes and had 2012 revenue of $82.4 million.

“Baja Broadband is a natural extension of our existing businesses, with significant potential to deliver increased returns over time,” said TDS Telecom CEO David Wittwer in a statement.. “Our strategy is to leverage our expertise and existing platform and technologies to accelerate growth in underserved, high-potential markets. We plan to build on Baja’s solid customer base and upgraded network to increase penetration and revenues with new services and products and outstanding customer experiences. And our experience with commercial customers will enable us to target new services and products to this fast-growing sector in Baja’s service areas.”

The Baja acquisition could be the spring board for further deals in the space for TDS.

“This acquisition is an important step in our ongoing efforts to build value over the long term,” said TDS CEO LeRoy T. Carlson, Jr., in a statement. “We continue to seek opportunities to invest our resources where we believe they can deliver strong returns over time, and expand into adjacent businesses like cable and hosted and managed services that enable us to leverage our core competencies to support our strategy to grow profitably.”