T1 and MPLS.com

Windstream announced today that it has entered into a definitive agreement to acquire PAETEC Holding Corp., a leading CLEC based in Fairport, N.Y., for $2.3 billion.

PAETEC provides telecommunications services primarily to business customers in 46 states and the District of Columbia. The company operates seven data centers in the U.S. and owns approximately 36,700 route miles of fiber in portions of 39 states and the District of Columbia.

“This transaction significantly advances our strategy to drive top-line revenue growth by expanding our focus on business and broadband services,” said Jeff Gardner, president and CEO.

“The combined company will have a nationwide network with a deep fiber footprint to offer enhanced capabilities in strategic growth areas, including IP-based services, data centers, cloud computing and managed services,” Jeff said. “Financially, we improve our growth profile and lower the payout ratio on our strong dividend, offering investors a unique combination of growth and yield.”

OTHER KEY FACTS: 

• Expected to provide about $100 million in annual pre-tax operating cost synergies and tax benefits with a net present value of about $250 million 

• Expected to be accretive on a free cash flow per share basis, excluding merger and integration costs, in the first year following closing 

• Slightly de-leveraging after synergies 

DETAILS OF THE DEAL: 

PAETEC shareholders will receive 0.460 shares of Windstream common stock for each PAETEC share owned under the terms of the agreement which was approved by the boards of directors of both companies. Windstream expects to issue approximately 73 million shares of stock valued at approximately $891 million, based on the company’s closing stock price on July 29, 2011. 

Windstream also will assume or refinance PAETEC’s net debt of approximately $1.4 billion at the time of closing. PAETEC stockholders are expected to own approximately 13 percent of the combined company upon closing of the transaction. 

The transaction is expected to close within six months, subject to certain conditions, including necessary approvals from federal and state regulators and PAETEC shareholders.

ENHANCED SCALE AND IMPROVED BUSINESS MIX: 

The combined company would have had $6.1 billion in total revenue and about $2.4 billion in adjusted operating income before depreciation and amortization, which excludes non-cash pension expense, restructuring charges and stock-based compensation expense, on a pro forma basis for the last 12 months ended March 31, 2011. Business and broadband revenues would have comprised approximately 70 percent of total revenue. 

The new company will serve business customers in 46 states and the District of Columbia and maintain approximately 100,000 fiber route miles across the country. Windstream will offer data center services across the United States and have improved capability to serve multi-location business customers.

STRONG BALANCE SHEET, DIVIDEND: 

Windstream will continue to have a strong balance sheet and liquidity. The transaction will be slightly deleveraging, including synergies. 

Windstream’s Board of Directors expects to continue paying its annual dividend of $1 per share after the transaction closes.

Company Release – 06/01/2011 10:00

LITTLE ROCK, Ark., June 1, 2011 (GLOBE NEWSWIRE) — Windstream began laying fiber optic cable today near Prentiss, Miss., as part of its first broadband stimulus project. The work is being funded in part by a federal grant under the American Recovery and Reinvestment Act of 2009.

The stimulus grants were designed to bring broadband to areas with so few residents that it would not be cost-effective to extend high-speed Internet service to them without a public-private partnership.

“This is an exciting day for Windstream and our customers in the Prentiss area,” said Terry Mathis, local manager for Windstream. “Windstream had already built out our broadband network to every area that we could serve in a cost-effective way, and now for the first time we will be able to reach customers in some of the most rural parts of our community.”

Broadband access to the Internet gives users a powerful tool for education, commerce and entertainment.

Nationally, Windstream was the largest single recipient of broadband stimulus grants awarded on a competitive basis by the U.S. Agriculture Department’s Rural Utilities Service.

Windstream won grants totaling $181.3 million for projects in 13 states, including Mississippi. The grants cover 75 percent of the cost of installing broadband. Windstream will invest the remaining 25 percent, a total of $60.4 million.

In Prentiss, the grant totals $416,322, and Windstream’s investment is $138,733. The project involves upgrading Windstream’s existing network with a little more than 7 miles of fiber optic cable as well as electronic equipment. It will reach approximately 170 potential customers southeast of Prentiss along Highway 42, giving them access to the Internet at speeds of at least 6 Mbps.

Construction is expected to be completed in July, and the new broadband service should be available to Windstream customers in August.

About Windstream

Windstream Corp. (Nasdaq:WIN), headquartered in Little Rock, Ark., is an S&P 500 communications and technology solutions provider with operations in 29 states and the District of Columbia and about $4 billion in annual revenues. Windstream provides IP-based voice and data services, MPLS networking, data center and managed hosting services and communication systems to businesses and government agencies. The company also delivers broadband, digital phone and high-definition TV services to residential customers primarily located in rural areas and operates a local and long-haul fiber network spanning approximately 60,000 route miles

In an article recently written by Dan O’Shea he states:

Super-regional and regional independents Windstream Communications, SureWest Communications, Frontier Communications and TDS are just some of the telcos that reported robust growth in their business services revenue. Though smaller telcos typically have not suffered as badly as larger ones from residential landline loss, the problem continues and the independents could use another channel to explore within their often-limited market boundaries.

Windstream is just one company that has pursued the business services channel through acquisitions, and while its purchases last year of Q-Comm and Hosted Solutions came with the usual integration costs, Windstream COO Brent Whittington called business services a key area of future investment for the telco. Q4 business service revenue was up about 2 percent year-over-year to $493 million.

To Learn more about Windstream’s Services contact Jonathan Kirby at 615-636-7178 or by email at jonathan.kirby@windstream.com

Full story at: http://connectedplanetonline.com/independent/news/Indie-telcos-seeing-business-sector-penetration-pay-off-0225/

Windstream added 12,000 broadband customers in the final three months of 2010 as total revenue increased 30%, the telecom provider disclosed Friday. The carrier allocated $143 million for capital spending, 56% more than a year earlier, and executives forecast an even higher capex budget for 2011. “That should provide incremental revenue opportunities because we are likely going to be the only wire provider in our areas with the ability to reach tens of thousands of new customers,” Chief Operating Officer Brett Whittington said.

Arkansas-based communications and technology company Windstream Corp. (Ticker: WIN) yesterday announced it is expanding its fiber network and technology services for businesses  into Tennessee with the closing of its $818 million acquisition of Q-Comm Corp. Q-Comm served approximately 5,500 small and medium sized business customers in Indiana, Kentucky, Tennessee and Winsconsin.

Windstream now has 60,000 route miles of fiber with an impressive fiber network in Middle Tennessee.

“Businesses need the latest in technology to help run their operations more efficiently and productively,” said Brent Clements, Windstream Director of District Sales for Nashville. “Windstream can offer businesses peace of mind by offering best-in-class service combined with superior voice, data, networking and managed solutions.”

LITTLE ROCK, Ark., Nov. 4, 2010 (GLOBE NEWSWIRE) — Windstream Corp. (Nasdaq:WIN – News) announced today that it has entered into a definitive agreement with ABRY Partners to acquire Hosted Solutions Acquisition, LLC (Hosted Solutions) in an all-cash transaction valued at $310 million.

Hosted Solutions, based in Raleigh, N.C., is a leading regional data center and managed hosting provider focused on enterprise-class Infrastructure as a Service (IaaS) solutions (managed hosting, managed services, colocation, cloud computing and bandwidth) for small and medium-sized business customers as well as large enterprises. The company serves more than 600 customers and has approximately 125 employees.

The acquisition of Hosted Solutions will transform Windstream’s data center business, increasing the scale and scope by adding five state-of-the-art SAS 70 Type II certified data centers in Raleigh, N.C.; Charlotte, N.C., and Boston with a total of 68,000 square feet of data center capacity. As a result, Windstream will have a combined total of 12 data centers across the country.

“Data center space is increasingly in demand among our existing business customers,” said Jeff Gardner, president and chief executive officer of Windstream. “Hosted Solutions is an excellent complement to our existing enterprise service portfolio. For the past decade, they have been delivering highly complex managed hosting solutions to customers of various sizes. In addition, they have a proven track record of growing revenue and generating significant free cash flow.”

Windstream expects to finance the transaction with existing liquidity through cash reserves and revolving credit capacity.

Windstream will be able to fully amortize the purchase price goodwill over 15 years, resulting in expected tax benefits with an estimated net present value of $52 million.

Windstream estimates the transaction will be accretive to free cash flow in the first year following the closing after expected annual synergies of approximately $1.5 million in operating expense savings and excluding integration charges.

The boards of both companies have approved the transaction, which is expected to close in the fourth quarter of 2010, subject to certain conditions, including necessary regulatory approvals.

Hosted Solutions has a history of revenue and OIBDA (operating income before depreciation and amortization) growth. Over the last three fiscal years, Hosted Solutions has grown revenue and OIBDA at a 48 percent and 91 percent CAGR (compound annual growth rate), respectively. The company has potential for future growth, as it currently only utilizes approximately 70 percent of its square feet capacity and 50 percent of its power capacity with the ability to expand at all of its existing data centers. In the 12 months ended Sept. 30, 2010, Hosted Solutions generated $51.7 million in revenue and $25.7 million in Adjusted OIBDA.

The Bank Street Group LLC and Stephens Inc. acted as financial advisers and Kutak Rock LLP acted as legal adviser to Windstream on the transaction. Kirkland & Ellis LLP acted as legal adviser to ABRY Partners and Hosted Solutions.

This press release references the non-GAAP financial measure Adjusted OIBDA for Hosted Solutions on a pro forma basis. A reconciliation of this measure to the most directly comparable GAAP measure is presented below:

Windstream claims the protection of the safe-harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements, including statements regarding the completion of the acquisition, expected benefits of the acquisition and growth potential of Hosted Solutions, are subject to uncertainties that could cause actual future events and results to differ materially from those expressed in the forward-looking statements. These forward-looking statements are based on estimates, projections, beliefs and assumptions that Windstream believes are reasonable but are not guarantees of future events and results. Actual future events and results of Windstream may differ materially from those expressed in these forward-looking statements as a result of a number of important factors. Factors that could cause actual results to differ materially from those contemplated above include, among others: receipt of required approvals of regulatory agencies; the possibility that the anticipated benefits from the acquisition cannot be fully realized or may take longer to realize than expected; the possibility that costs or difficulties related to the integration of Hosted Solutions operations into Windstream will be greater than expected; the ability of the combined company to retain and hire key personnel; and those additional factors under the caption “Risk Factors” in Windstream’s Form 10-K for the year ended December 31, 2009 and in subsequent Securities and Exchange Commission filings. In addition to these factors, actual future performance, outcomes and results may differ materially because of more general factors including, among others, general industry and market conditions and growth rates, economic conditions, and governmental and public policy changes. Windstream undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing review of factors that could cause Windstream’s actual results to differ materially from those contemplated in the forward-looking statements should be considered in connection with information regarding risks and uncertainties that may affect Windstream’s future results included in Windstream’s filings with the Securities and Exchange Commission at www.sec.gov.

Windstream Corp. (Nasdaq:WIN – News), headquartered in Little Rock, Ark., is an S&P 500 company with communications operations in 23 states and about $4 billion in annual revenues. Windstream provides phone, high-speed Internet and high-definition digital TV services. The company also offers a wide range of IP-based voice and data services and advanced phone systems and equipment to businesses and government agencies. For more information about Windstream, visit www.windstream.com.

The Windstream Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7044

Hosted Solutions is a premier provider of enterprise-class managed hosting solutions on the East Coast. Its high quality data center and managed hosting services, including a dedicated server offering, managed colocation and its cloud computing suite, maintain and protect customers’ mission-critical IT systems and applications, enabling them to reduce operating costs, lower the risk of downtime, focus on core competencies, and achieve their top business objectives. The company operates five SAS 70 Type II certified data centers in Raleigh, N.C.; Charlotte, N.C., and Boston, providing best-of-breed data center operations with hardened physical infrastructure and the highest level of security. It also offers a complete managed services portfolio, including enterprise storage, network, OS management, middleware server management, DBA services, security and disaster recovery. Hosted Solutions is backed by Boston-based private equity firm ABRY Partners. For more information about Hosted Solutions, visit www.hostedsolutions.com.

Hello Everyone,

In light of the passing storms and massive unprecedented flooding, I wanted to send an email out to let everyone know about our datacenter in Downtown Nashville. Windstream has allocated rack space and bandwidth along with placing extra Cisco certified technicians in our datacenter to help with relocation efforts.

I’ve spoken to several business owners today and they are doing their best to deal with the disaster. If you know of anyone who needs to relocate telephone or data equipment please let me know. So far today, I’ve spoken to twelve businesses who were trying  get their communications relocated. If I can be of any assistance to you, your friends or colleagues please let me know. Our thoughts and prayers go out to those affected. We’re here to help with the recovery effort. Thanks for your time.

Sincerely,

Jonathan Kirby

Account Executive

(615)620-5223 (w)

(615)995-2105 (C)

(615)327-8598(F)