Electric Utility Acquires Local Telephone Company for "Convergency Potential"

Texas Utilities will purchase Lufkin-Conroe Communications for $320 million in stock, the first outright electric company purchase of a telecommunications company amid growing "Wires Industry" mergers and joint ventures between the energy and telecommunications industries. In August, a unit of Potomac Electric Power Company in Washington D.C. pledged to spend up to $150 million in a 50-50 joint venture with the telecom unit of C-TEC Corporation, in Princeton, New Jersey, to provide a package of phone, cable, and internet services. In June, Utilicorp United Inc., of Kansas City, MO and Peco Energy Company of Philadelphia, said they would work with AT&T Corporation to market natural gas, electric, telephone, Internet and home security services in a single package. And PacifiCorp of Portland, Oregon recently launched a phone-power hybrid venture called "enable."

Texas Utilities indicated it is interested in the acquisition's "convergency potential," meaning the prospects of selling customers energy and telecommunications products in one package. Already, about 40,000 customers of TU's largest subsidiary, TU Electric of Southeast Texas, are also Lufkin customers. Lufkin Conroe has annual revenue of about $100 million. END

Copyright 1997 by the American Local Power News