Nelnet (NYSE: NNI) said it has agreed to acquire ALLO Communications, a Nebraska-based telecommunications company.
The transaction is expected to close in the fourth quarter of 2015, subject to normal regulatory approval and closing conditions.
ALLO specializes in ultra-fast Internet services that are currently available to less than 10 percent of homes across the country. ALLO´s all-fiber network allows access to Internet speeds of one gigabit per second (about 100 times faster than standard broadband connections), providing a completely different experience for users.
The acquisition of ALLO leverages Nelnet´s financial strength and liquidity, infrastructure, and customer service capabilities in a growing operating business with recurring revenue and strong management. The strategic investment further diversifies Nelnet´s revenue outside of education and supports the company´s focus on long-term value creation.
Founded in Imperial, Nebraska, ALLO was formed in 2003, and currently provides world-class communications services by creating gigabit communities. In 2004, ALLO began building a state-of-the-art fiber network in two Nebraska communities, and today provides gigabit fiber to homes and businesses in Scottsbluff, Gering, Bridgeport, North Platte, Ogallala, and Alliance.
ALLO will become a subsidiary of Nelnet and retain its brand identity. Moline and Jeff Kuenne, Executive Vice President for Network Operations, will continue to lead ALLO and its more than 100 associates.
Under the terms of the agreement, Nelnet will pay USD46.25 million for 92.5 percent of the outstanding equity and membership interests of ALLO. The remaining 7.5 percent of the equity and membership interests of ALLO will be owned by ALLO management, who will also have the opportunity to earn additional equity based on the performance of the company.
For the year ended December 31, 2014, ALLO had revenue of USD12.2 million, an increase of 30 percent from the prior year. Earnings before interest, taxes, depreciation, and amortization (EBITDA) doubled during the same time period to USD2.9 million. Nelnet anticipates investing significant capital to continue expanding the ALLO fiber network in existing service areas and in other communities.
ALLO Communications offers broadband, Internet, telephone, and television to residents and businesses in Nebraska cities. With a clear focus on Nebraska, ALLO is developing a world-class regional gigabit fiber network to expand business opportunities, create jobs, and improve quality of life for Nebraskans.
Headquartered in Lincoln, Nebraska, Nelnet is a diversified technology and educational solutions company. It began its life focused on helping students and families plan, prepare, and pay for their education. Since that beginning, Nelnet has evolved to include making the administrative and financial processes more efficient for schools and financial organizations and further diversification outside of education in businesses that share a commitment to exceptional customer experience with great service and best-in-class technology.