ALJ/TJS/lil Date of Issuance 6/11/2012

Decision 12-06-004 June 7, 2012

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Joint Application of Consolidated Communications Holdings, Inc., Consolidated Communications Inc. and WH Acquisition II Corp. and SureWest Communications, SureWest Telephone (U1015C), SureWest Long Distance (U5817C), and SureWest TeleVideo (U6324C) To Authorize the Acquisition of Control of SureWest Telephone (U1015C), SureWest Long Distance (U5817C), and SureWest TeleVideo (U6324C).

Application 12-02-011 (Filed February 10, 2012)

DECISION APPROVING SETTLEMENT AND ACQUISITION OF
SUREWEST COMMUNICATIONS, SUREWEST TELEPHONE,
SUREWEST LONG DISTANCE AND SUREWEST TELEVIDEO BY
CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.

DECISION APPROVING SETTLEMENT AND ACQUISITION OF
SUREWEST COMMUNICATIONS, SUREWEST TELEPHONE,
SUREWEST LONG DISTANCE AND SUREWEST TELEVIDEO BY CONSOLIDATED COMMUNICATIONS HOLDINGS, INC. 11

1. Summary 22

2. Factual Background 33

3. The Transaction 66

3.1. Parties to the Transaction 66

3.2. Terms of the Transaction 88

4. The Settlement Agreement 1010

5. Jurisdiction and Relevant Precedent 1212

6. Issues Before the Commission 1515

7. Discussion of Settlement and Transaction, as Modified by
the Settlement 1616

7.1. Settlement Meets D.92-12-019 Preconditions of an "All Party" Settlement 1616

7.2. The Transaction, as Modified by the Settlement Should Be
Authorized; the Settlement Agreeement, when Conjoined to
the Transaction, Meets Rule 12.1(d) 1717

8. California Environmental Quality Act (CEQA) Considerations 2121

9. Categorization and Need for Hearing 2121

10. Conclusion 2222

11. Waiver of Comment Period 2323

12. Assignment of Proceeding 2323

Findings of Fact 2323

Conclusions of Law 2626

ORDER 2727

ATTACHMENT A - Settlement Agreement

ATTACHMENT B - Amendment to Settlement Agreemen

DECISION APPROVING SETTLEMENT AND ACQUISITION OF
SUREWEST COMMUNICATIONS, SUREWEST TELEPHONE,
SUREWEST LONG DISTANCE AND SUREWEST TELEVIDEO BY
CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.

1. Summary

Pursuant to Sections 851-854 of the Pub. Util. Code,¹ we approve the proposed transaction whereby SureWest Communications, SureWest Telephone, SureWest Long Distance, and SureWest TeleVideo are acquired and directly controlled by WH Acquisition II Corporation and are thereby acquired and subject to the indirect control of Consolidated Communications Holdings and Consolidated Communications, Inc. (Consolidated). In connection with the transaction, we approve the repayment of the existing debt of SureWest Communications and the re-encumbrance of these assets to secure new financing, which is an integral part of this transaction.

In addition, we approve the Settlement Agreement² and the Amendment to Settlement Agreement³ entered into by Consolidated Communications Holdings, Inc., Consolidated Communications Inc., WH Acquisition II Corp., SureWest Communications, SureWest Telephone, SureWest Long Distance, SureWest TeleVideo, the Division of Ratepayer Advocates, The Utility Reform Network and Citizens Telecommunications Company of California, Inc. d/b/a Frontier Communications of California that adopts additional terms to be executed as part of the implementation of the change of control.

This Settlement Agreement resolves all contested issues in this proceeding and assures that the proposed acquisition of the SureWest Companies by Consolidated, with the additional terms adopted in the Settlement Agreement, is in the public interest.

With the filing of this "all party" Settlement Agreement, this becomes an uncontested matter in which we are granting the relief sought.

This proceeding is closed.

¹ All statutory references in this decision are to the Pub. Util. Code unless stated otherwise.

² The Settlement Agreement is included as Attachment A to this decision.

³ The Amendment to Settlement Agreement is included as Attachment B to this decision.