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In re PURCHASE BY THE PACIFIC TELEPHONE AND TELEGRAPH COMPANY OF THE PROPERTIES OF THE NEZ PERCE CoOPERATIVE TELEPHONE COMPANY.

Finance Docket No. 3249.

Decided November 20, 1923.

Acquisition of Property Approved.

REPORT.

The Pacific Telephone and Telegraph Company, on October 2, 1923, filed an application under Section 407 of the Transportation Act, as amended, for a certificate that the acquisition by it of the properties of the Nez Perce Cooperative Telephone Company, hereinafter called the Nez Perce company, will be of advantage to the persons to whom service is to be rendered and in the public interest. No representations were made by state authorities. A hearing was held and no objection to the granting of the application has been presented to us.

The applicant is one of the so-called Bell companies. It owns and operates telephone exchanges and toll lines in California, Oregon, Washington, and a part of Idaho, including the counties of Idaho, Lewis, and Nez Perce.

The Nez Perce company owns and operates 11 exchanges, with connecting toll lines, at points in Idaho, Lewis, and Nez Perce Counties, Idaho, from which it serves 1,593 subscriber stations. The applicant maintains duplicate exchanges at 9 points served by the Nez Perce company, from which it serves 3,894 subscriber stations. Approximately 200 subscriber stations are duplicated. The largest municipality in the competitive territory is Lewiston, which has an estimated population of 8,250. There is no connection or interchange of business between the systems of the two companies, and subscribers of the Nez Perce company have only a limited toll service.

By a tentative contract made June 23, 1923, the applicant agrees to purchase all the properties of the Nez Perce company, free from all encumbrances except the lien of any

[I. C. taxes not yet payable, for $40,000 in cash. The proposed consideration includes payment for the equipment and supplies on hand at the date of transfer, but not accounts receivable. No new securities will be issued to effect the proposed acquisition.

An appraisal of the plant and equipment of the Nez Perce company, as of November 15, 1922, made by an engineer of the applicant, fixes the cost of reproduction new at $130,210, and, less depreciation, $70,350. From January 1, 1922, to September 30, 1923, operating revenues and expenses of the Nez Perce company were $38,178.25 and $39,640.94, respectively.

The estimated cost of unifying the properties is $4,970. The value of the property to be retired is $11,120 and the cost of removing the displaced plant will be $1,180. The applicant estimates that the acquisition of the properties will increase its annual net revenue $5,500. No change in existing rate schedules is in immediate contemplation. It is represented that the proposed unification of the properties will effect large economies and will prevent the economic waste involved in further duplication of extensions to the two systems. It will also enable subscribers of the Nez Perce company to secure unlimited toll service. The applicant is, and after the consummation of the proposed transaction will be, subject to the Interstate Commerce Act.

Communications from the municipal authorities of all cities and towns in which duplicate exchanges are maintained, the commissioners of Nez Perce County, and a large number of telephone subscribers, were introduced in evidence, all recommending the unification of the properties.

Upon the facts presented, we find that the acquisition by the applicant of the properties of the Nez Perce company under the terms of the contract described in the application will be of advantage to the persons to whom service is to be rendered and in the public interest. An appropriate certificate will be issued.

C. L. 144]

CERTIFICATE.

A hearing and investigation of the matters and things involved in this proceeding having been had, and said Division having, on the date hereof, made and filed a report containing its findings of fact and conclusions thereon, which said report is hereby referred to and made a part hereof,

It is hereby certified, That the acquisition by The Pacific Telephone and Telegraph Company of the properties of the Nez Perce Cooperative Telephone Company under the terms of the contract described in the application and report aforesaid, will be of advantage to the persons to whom service is to be rendered and in the public interest. November 20, 1923.

In re PURCHASE BY UNITED TELEPHONE COMPANY OF PROPERTIES OF THE NEW HOPE TELEPHONE COMPANY.

Finance Docket No. 3295.

Decided November 30, 1923.

Acquisition of Property Approved.

REPORT.

The New Hope Telephone Company and the United Telephone Company, hereinafter referred to as the New Hope company and the United company, respectively, on October 24, 1923, filed a joint application under Section 407 of the Transportation Act, as amended, for a certificate that the acquisition by the United company of the properties of the New Hope company will be of advantage to the persons to whom service is to be rendered and in the public interest. The Public Utilities Commission of Kansas has entered an order authorizing the proposed acquisition. A hearing has been held and no objection to the granting of the application has been presented to us.

The New Hope company owns and operates a telephone exchange at Concordia, Kansas, from which it serves ap

[I. C. C

proximately 290 subscriber stations. The United company owns and operates telephone exchanges and toll lines in northern and northwestern Kansas, including an exchange at Concordia, serving approximately 1,700 subscriber stations, of which 90 are duplicated by the New Hope company. The United company has a connection with the toll lines of the American Telephone and Telegraph Company. For several years subscribers of the New Hope company have been able to secure toll service through the switchboard of the United company, but are unable to communicate with subscribers of that company.

On March 12, 1923, the applicants made a tentative contract by which the United company agrees to purchase the properties of the New Hope company free from incumbrances for $8,120, of which $5,600 is to be paid in cash, and the balance in telephone service to each of the stockholders of record on November 6, 1922. In no event are the stockholders of the New Hope company to receive more than one year's service from the date of the transfer of the property for each share of stock owned by them on November 6, 1922. No securities will be issued to effect the proposed acquisition.

An appraisal made by the valuation engineer of the United company, as of January 1, 1923, fixes the cost of reproduction new of the properties of the New Hope company at $22,185.63, and, less depreciation, $10,835.76. The value of the property to be retired, less salvage, is estimated to be $4,048.89, and the estimated cost of unifying the properties is $976. In 1922 operating revenues and expenses of the New Hope company were $6,945.10 and $4,561.81, respectively.

The United company is an independent organization, controlled largely by local interests. Its general balance sheet as of April 30, 1923, showed assets, $4,387,697.46; capital stock, $3,287,300; current liabilities, $232,534.46; accrued liabilities not due, $113,316.45; reserves, $582,167.54; surplus and undivided profits, $172,379.01. In 1922 its operating revenues were $1,004,242.49; operating expenses,

C. L. 144]

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$732,335.30; net income, $214,801.32. It is expected that the proposed acquisition will increase its annual gross and net revenues $3,111 and $1,233.10, respectively. No change in rate schedules is in immediate contemplation.

Upon unification of the properties, the 90 duplicate subscribers will continue to have access to all subscribers of both systems for the price now paid for the service of the United company, and the 200 sole subscribers of the New Hope company will obtain telephone connection with 1,600 stations in the Concordia exchange to which they now are without access. The long distance service at present received by subscribers of the New Hope company will be materially improved, as the necessity for passing through two switchboards at Concordia will be eliminated. The New Hope company represents that the city officials of Concordia are pressing it to place its wires underground in a considerable area and to remove its poles from the streets in certain sections of the city; that it has not provided any reserve for such a contingency, and is unable to raise the necessary capital for such reconstruction.

The United company is, and after the consummation of the proposed transaction will be, subject to the Interstate Commerce Act.

Upon the facts presented, we find that the acquisition by the United company of the properties of the New Hope company under the terms of the contract described in the application will be of advantage to the persons to whom ⚫ service is to be rendered and in the public interest. A certificate to that effect will be issued.

CERTIFICATE.

A hearing and investigation of the matters and things involved in this proceeding having been had, and said Division having, on the date hereof, made and filed a report containing its findings of fact and conclusions thereon, which said report is hereby referred to and made a part hereof,

It is hereby certified, That the acquisition by the United

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