Champlain Broadband Acquires Burlington Telecom

Champlain Broadband, a subsidiary of Schurz Communications has completed the transaction processes to acquire Burlington Telecom. The city Burlington authorities had cleared the approval documents that made the acquisition legal and complete.

Champlain Broadband will now own and operate the telecommunication systems of Burlington Telecom. The deal was worth $30.8 million that the Blue Water Holdings made with the Burlington Telecom.

Burlington Telecom has been a municipally owned and operated advanced fiber optic network serving the city of Burlington, Vermont, since 2003. The company will continue to be managed locally in Burlington and operate under the name Burlington Telecom.

The Vermont Public Utility Commission has approved the sale of Burlington Telecom from the city of Burlington and holding company Blue Water Holdings to Schurz Communications. It will be owned by Schurz’s local affiliate, Champlain Broadband.

The approval came over the objection of a group of residents, who had argued that the PUC should not have approved the sale due to the $16.9 million the city, led by then-mayor Bob Kiss, diverted from city funds to keep Burlington Telecom operating.

Schurz Communications, with its original businesses started from publishing and broadcasting has evolved its business strategy with the purchase of cable, telco, broadband companies in 1968. In February last year, the Schurz Communications had announced that it had acquired leading compliant hybrid cloud provider Online Tech. An additional investment in the cloud infrastructure assets of Neverfail was announced in December 2018 and highlighted the company’s interest in expanding Online Tech’s presence on a global scale, according to the release.

The city sold Burlington Telecom in 2014 to Lake Champlain Transportation Co. owner Trey Pecor’s Blue Water Holdings, which has leased the assets back to the city. In November 2017 the City Council voted in favor of selling the Burlington Telecom to Indiana-based Schurz Communications in a contentious vote, choosing Schurz over a local co-op and Toronto-based Ting.

The city received approximately $6.3 million from the sale and has the option to purchase up to one-third of membership interests in Champlain. The PUC ruled that city’s charter does not prohibit the city from investing in Champlain.

The citizen intervenors had pointed to language in the city’s charter which states that the PUC should ensure that any and all losses from the business and “any and all costs associated with the investment of cable television, fiber optic, and telecommunications network and telecommunications business-related facilities, are borne by the investors in such a business, and in no event are borne by the City’s taxpayers.”

The commission had issued an order in 2014 resolving the city’s violations of its certificate of public good relating to the $16.9 million of city funds. The commission ruled that since it had resolved the violations in 2014, it did not have the enforcement authority to require the city reimburse taxpayers.

The PUC ruled that the charter does not apply in the way the intervenors claimed it did, and concluded that the sale will allow the city to recoup the maximum portion of proceeds possible at this time.

If the PUC denied the sale, the maximum percentage of the sale the city could recoup under its agreement with Blue Water would decrease. This would lead the city to recoup even less than it does now, the PUC ruled.

Some of those in the top authorities have an opinion that the city should invest in the new company. The city has a year to decide after the closing of the sale whether it wants to invest in BT.

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