The purchase of Durango-based Cedar Networks by Toronto-based Ting Internet will likely mean an expansion of the Durango business that builds fiber-optic internet systems in Colorado and New Mexico.
Ting Internet is a subsidiary of Toronto-based Tucows Inc., which is traded on the Nasdaq exchange as TCX. Tucows paid $9 million in cash and $2 million in restricted stock for Cedar Networks last month, according to financial documents filed with the Securities and Exchange Commission. Additionally, the sales agreement contains contingent payments of up to $4 million that are subject to meeting performance benchmarks. If benchmarks are met, those payments would be made at 24 and 36 months from the Jan. 1 closing.
As a small company with 19 employees, Jeff Fink, a co-founder of Cedar Networks, said the Durango internet network builder was looking for a way to transition to a bigger company. Cedar Networks has 14 employees in Durango and five in its satellite office in Carbondale.
Cedar Networks provides internet service to more than a dozen different cities and towns in Colorado and New Mexico, and it was becoming difficult to serve all the different networks with a small staff.
“Being in that many towns with a small staff was presenting challenges,” Fink said. “We need to add resources to maintain our networks and to build full fiber networks in other towns and cities.”
Joining Ting will mean the larger company can devote resources to the Durango operation, and Fink said he expects Ting will add to the Durango office’s staff.
“We are hiring. We haven’t added anyone yet, but we expect to add technicians for building networks and other crews for installations,” he said.
Ting Internet has operations in six different cities across the country. The closest operation is in Centennial on the Front Range.
Some employees in Centennial are interested in transferring to Durango, Fink said.
Joining Ting Internet should provide the old Cedar Networks operation with economies of scale that will enhance its existing networks with new technology and capabilities and will take pressure off Cedar’s small staff, Fink said.
“At Cedar, as a small company, everybody had three or four different jobs. Everyone pitched in however they could. Joining Ting will allow the staff to specialize on what each of them does best. It will be more efficient for everybody,” he said.
In addition, the Durango operation will have access to Ting’s design team in building networks and other divisions that specialize in getting fiber-optic lines to homes, Fink said. Ting also has separate customer support divisions and technical support divisions the Durango office will be able to draw from.
Ting Internet also has access to capital that Cedar could not match, and that should help in developing more robust networks in the future and improving Cedar’s existing networks, Fink said.
Ting also brings better benefit packages for employees, including health coverage, which Cedar did not have for all its employees. Benefits include a 401(k) plan.
“The folks at Ting are really good people, and they recognized the talent we have here, and they stressed they really wanted to take care of the staff. They worked with staff to make this as comfortable as possible. It’s a stressful time for employees when your company is being purchased,” Fink said.
Cedar adds about 1,400 customers and 6,400 addresses served by fiber-optic internet to the Ting Internet footprint.
For 2018, the last year for which Tucows Inc. has filed an annual financial report, the firm reported net income of $17.14 million, down from $22.3 million in 2017. Earnings before interest taxes, depreciation and amortization for 2018 was $45.72 million, compared with $38.3 million in 2017.
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