GRAND RAPIDS, Mich. - US Signal Company, LLC, a prominent digital infrastructure provider, has finalized the acquisition of OneNeck IT Solutions LLC and OneNeck Data Center Holdings LLC from Telephone and Data Systems, Inc. (NYSE: TDS). The move significantly expands US Signal's data center footprint and enhances its service offerings.
OneNeck, headquartered in Madison, Wisconsin, specializes in secure hybrid IT and multi-cloud solutions, operating data centers in six Western and Midwestern states. The company serves a diverse clientele across 45 states in various sectors, including banking, healthcare, and government.
With this acquisition, US Signal, based in Grand Rapids, Michigan, now operates 16 data centers, up from its previous 10, and has notably increased its square footage. The company has extended its reach to the West Coast by adding data centers in Phoenix, Arizona; Denver, Colorado; and Bend, Oregon. Additional markets now covered by US Signal's fiber network include Madison, Wisconsin; Minneapolis, Minnesota; and Des Moines, Iowa. The acquisition also more than triples the commercial power under US Signal's management.
Daniel Watts, CEO of US Signal, expressed enthusiasm about the merger, emphasizing the enhanced capabilities the combined entity will provide to customers, as well as the shared commitment to client service excellence.
The acquisition was facilitated by legal advice from Mayer Brown, financial guidance from DC Advisory, and Texas Capital Securities acting as the Exclusive Placement Agent.
US Signal, established in 2001, is known for its comprehensive digital infrastructure services, including connectivity, cloud hosting, and disaster recovery, all supported by a robust fiber network. The company also offers managed and professional services to help customers optimize their IT resources.
Igneo Infrastructure Partners, US Signal's parent company, is an investment team within the First Sentier Investors Group, managing over $19.2 billion in assets as of June 30, 2024. Igneo focuses on investing in mid-market infrastructure companies across various sectors, including digital infrastructure and renewables.
This expansion is expected to bolster US Signal's position in the digital infrastructure market, offering a wider range of services and geographic coverage to its customers. The information regarding the acquisition is based on a press release statement.
In other recent news, TDS and its subsidiary UScellular have reported robust financial improvements for Q2 2024, characterized by double-digit growth in adjusted EBITDA and a significant increase in free cash flow. The companies have also announced a pending transaction with T-Mobile for the sale of their wireless operations, subject to regulatory approval, while UScellular is set to retain key assets. In parallel, a deal is set for the divestment of OneNeck IT Solutions.
Simultaneously, several Wall Street firms, including TD Securities, BNY Mellon (NYSE:BK), and Truist, have agreed to pay over $470 million in settlements with U.S. regulators due to violations of recordkeeping rules. The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) announced these settlements as part of a broader enforcement initiative to address non-compliant use of "off channel" work communications.
These are recent developments that highlight the dynamic nature of the business environment. As part of their strategic plan, TDS and UScellular are advancing their broadband services, with TDS Telecom set to introduce TDS Mobile and expand its fiber reach. Meanwhile, Wall Street firms are navigating regulatory challenges, underscoring the importance of compliance in the financial sector.
InvestingPro Insights
In light of Telephone and Data Systems, Inc.'s (NYSE: TDS) recent divestiture of OneNeck IT Solutions, it's worth noting some key financial metrics and insights from InvestingPro that may be of interest to investors and industry watchers. TDS has a market capitalization of around $2.74 billion, which is significant for a company in the telecommunications sector. Despite challenges in profitability, with a reported negative P/E ratio of -4.89 indicating that the company has not been profitable over the last twelve months, TDS has maintained a strong commitment to its shareholders. This is evidenced by its impressive track record of raising its dividend for 31 consecutive years and maintaining dividend payments for an even longer period of 51 years.
InvestingPro Tips highlight that while analysts do not expect TDS to be profitable this year, the company's liquid assets exceed its short-term obligations, suggesting a level of financial stability in the near term. Additionally, TDS has experienced a strong return over the last month and a large price uptick over the last six months, with the stock trading near its 52-week high. These dynamics may reflect investor confidence or strategic moves such as the recent sale of OneNeck IT Solutions.
For investors seeking more detailed analysis and additional tips, InvestingPro provides an extensive list of insights. In fact, there are 9 additional InvestingPro Tips available for TDS at https://www.investing.com/pro/TDS, which could offer a deeper understanding of the company's financial health and market position.
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