Windstream will acquire CT Communications in the second half of this year for approximately $585 million, the companies said today. In the process, Windstream eliminates a growing competitor in a growing market.

Windstream will add another 158,000 access lines and 29,000 broadband subscribers through the acquisition.

The definitive agreement signed by the companies covers all of the outstanding shares of CT Communications for $31.50 per share in cash. That is a 31% premium over CT’s previous 30-day trading average.

“Not only do we believe we can add value by improving that business over time, but by acquiring that business we will improve our existing operations in North Carolina. It doubles our size in that space,” said Jeff Gardner, president and CEO of Windstream.

Gardner said his company will be able to significantly improve CT Communications’ business from a cash flow perspective.

The acquisition will be unique, Gardner said, because CT’s properties are adjacent to a number of Windstream properties in that market.

“They are a competitor of ours in the CLEC market of Charlotte, which is out third largest CLEC market across the country. So we will be a stronger player there.” Gardner said. He added that, at 158,000 access lines, the deal was not huge compared to Windstream’s 3.2 million, but it was strategic because of its proximity to its existing market.

CT Communications started as Concord Telephone Co. in 1897 and has deep roots in the community there, Gardner said. “What we are trying to do with our brand is find a way to become part of these communities, not only in terms of offering them technology, but by trying to differentiate ourselves in terms of being involved in and being in the community everyday.”

With 10 Mb/s available to about 95% of its customers, “Their network assets are very valuable,” Gardner said.

Windstream also picks up the CT’s wireless business. Gardner said that because of his company’s expertise in this space—from its history as part of Alltel as well as the prior experience of its management team—Windstream should be able to improve the margins in that business over time.

“We also have some ‘optionality’ should we conclude it makes more sense for someone else to own the asset. You could always monetize it,” Gardner said.

Windstream is shooting for approximately $30 million worth of synergies through the acquisition, coming mostly from the typical areas of administration, sales and marketing and engineering. The company announced $52 million in synergies from its previous acquisition of Valor, which is more than twice the size of CT Communications.