Crestone, Colo. Dec. 8, 2016 — The acquisition of Crestone Telecom by its sister company, Colorado Central Telecom, wasn’t finalized in some anonymous corporate board room.
Instead, the meeting took place over pizza and beer at the Bliss Cafe in Crestone.
Crestone Telecom may be growing up, but it’s still very much the grassroots organization it was in the beginning.
“I want all Crestonians and all those who work at Crestone Telecom to have a big round of applause for accomplishing something that many communities around Colorado have not been able to do: take matters into their own hands and use local talent to solve a local problem,” said Ralph Abrams, CEO of both Crestone Telecom and Colorado Central Telecom.
This latest chapter in the Crestone Telecom’s history will mean little practical change for customers, beyond a different name on their monthly bill. Customers will still be on the same network, talk to the same customer service staff and call the same number for tech support.
For the company, however, it’s a big deal.
The merger of Crestone Telecom with its sister enterprise, Colorado Central Telecom, is essential for the long-term health of both companies. Together, the companies will have roughly 1,800 Internet and VoIP phone customers across the upper San Luis Valley and Chaffee County.
Right now, Crestone Telecom and Colorado Central Telecom are separate companies under separate ownership, but share the same staff and network.
To understand how the companies got to this point, let’s backtrack to 2011. That’s when a group of Crestone residents banded together to improve Internet service, eventually forming Crestone Telecom.
“After years of requesting the incumbent provider to increase our Internet service and seeing no action on their side, we decided to take matters into our own hands,” Abrams said. “It was a perfect exercise in community activism. Local people with a local need got together and figured out how to do it.”
With the help of volunteers and 53 local investors, Crestone Telecom’s first customer came online on April 4, 2012. Crestone Telecom had more than 600 customers throughout the upper San Luis Valley just three years later. The company’s growth caught the attention of the governor’s office, and Crestone Telecom was named Most Effective and Efficient Broadband Innovator of the Year at the 2013 Mountain Connect conference.
That success caught the attention of Wendell Pryor with the Chaffee County Economic Development Corporation, who approached Abrams about expanding north into the Upper Arkansas River Valley.
“Basically, the tail started wagging the dog,” Abrams said.
Crestone Telecom didn’t have the capital needed for the expansion, so the push into Chaffee County was financed by a separate set of investors. So it was that Crestone Telecom and Colorado Central Telecom came to share the same employees and same network, yet were still legally distinct companies under different ownership.
Though this complicated ownership structure was necessary at the time, it soon became cumbersome. While Crestone Telecom and Colorado Central Telecom functioned as one company, they required separate financial records, separate customer service software and separate marketing.
This presented some practical difficulties. For instance, when you have the same customer service staff for two separate companies, do they answer the phone with “Hello, Crestone Telecom,” or “Hello, Colorado Central Telecom?”
The ownership structure also had financial ramifications. As two separate companies, Crestone Telecom and Colorado Central Telecom couldn’t comply with GAAP – Generally Accepted Accounting Principles.
It may sound dry, but GAAP compliance is critical to obtaining grant funding and financing needed for the survival of both companies.
For these reasons, Colorado Central Telecom and Crestone Telecom CEO Ralph Abrams sought to merge the two companies.
Colorado Central Telecom is acquiring Crestone Telecom, with the unanimous support of Crestone Telecom investors for the acquisition to move forward. All Crestone Telecom investors were polled about the acquisition, even smaller backers with nonvoting shares.
“We asked everybody, even those who technically cannot vote,” Abrams said,
Crestone Telecom investors were given the option to cash out their shares, or transfer their shares to the combined company. The deal is expected to close by year-end 2015.
For Abrams, the merger of the two companies is less the end of an era, and more the start of a new one.
“It definitely feels like a milestone and is a long time coming,” Abrams said. “This is a necessary and vital step to solidify our company culture and continue to bring high-speed broadband and VoIP services to rural Colorado.”