Consolidated Deal Clears White House Foreign Ownership Review

WASHINGTON, Dec. 2, 2024 – Federal law enforcement officials have greenlit Searchlight Capital’s bid to take Consolidated Communications private. The private equity firm announced a $3.1 billion deal to acquire the company with British Columbia Investment in October 2023.

Back in May the Federal Communications Commission, which will need to approve the deal, referred the transaction to a White House committee formalized in 2020 to advise the agency on foreign ownership issues.

The committee is composed of the Attorney General and the heads of the Defense Department and Department of Homeland Security, plus advisors from other agencies.

The approval comes with more conditions than when the committee approved a major Searchlight investment in Consolidated in 2021. Extra conditions include reporting to the committee, plus DOJ and DHS generally, when records or domestic communications will be stored at a new location and a list of countries from which that information is accessed. The companies also agreed to undergo third-party compliance audits at the agencies’ discretion.

“After discussions with representatives of the Companies in connection with the above-captioned application, the Committee has concluded that the additional commitments set forth in the [letter of agreement] will help ensure that those agencies with responsibility for enforcing the law, protecting the national security, and preserving public safety can proceed appropriately to satisfy those responsibilities,” Sean Conway, deputy counsel for the NTIA, the White House’s senior telecom advisor, wrote in a Nov. 25 letter to the FCC.

The FCC determined Searchlight is ultimately controlled by its three founding partners: Erol Uzumeri, a Canadian citizen, Oliver Haarmann, a German citizen, and Eric Zinterhofer, an American Citizen. Ajit Pai, FCC chairman under the first Trump administration, is a partner at Searchlight. BCI would have a 23.2 percent stake in Consolidated after the deal. 

Consolidated has nearly 400,000 broadband subscribers in the US, with nearly 250,000 fiber subscribers.

Attorneys for the three companies had met with FCC staff on Nov. 6 to ask that the agency approve the transaction by the end of the year. The companies had planned to close the deal by the first quarter of 2025.

“The parties explained that closing the transaction by the end of 2024 will provide significant cost savings that will permit [Consolidated] to fully focus its financial resources on continuing the company’s fiber expansion strategy,” attorneys wrote in an ex parte filing following the meeting. “To facilitate closing by year-end, the parties requested approval of the transaction by December 19, 2024.”

The companies said they have received approval from all states in which Consolidated operates after Vermont cleared the transaction last month.