Securus is requesting approval from the FCC to transfer control of Preferred Communications of Texas, LLC from Embarq to Securus.
Preferred’s sole asset is the contract to provide services to the Texas Department of Criminal Justice (TDCJ) for which Securus is the subcontractor.
Embarq formed Preferred last year to hold the TDCJ Contract when it sold the rest of its incarcerated calling services (ICS) to Inmate Calling Solutions, LLC (d/b/a ICSolutions).
With the transfer of Preferred, Embarq will completely exit the ICS market.
According to Securus’s filing, this transaction is substantially similar to transactions approved last year in which Embarq sold its ICS business, except for the TDCJ Contract, to ICSolutions and Legacy sold ICS contracts, assets and customers to Global Tel*Link as part of Legacy’s withdrawal from the ICS business.
The TDCJ Contract
The current TDCJ Contract was entered into with Embarq on September 1, 2018. Pursuant to Texas law, ICS contracts must extend for a period of at least seven years and include two-year optional renewal terms. The initial term of the TDCJ Contract thus expires in August 2025 and it reserves for the TDCJ the right to exercise three optional two-year renewal terms.
At the time of the signing, the TDCJ Contract included 110 facilities of various sizes, including four facilities that were either mothballed or showed zero population, and included an estimated 155,239 incarcerated persons, of which an estimated 134,064 were eligible to make use of the services. Currently, the TDCJ facilities have a total ADP of approximately 120,000. The rate for all ICS calls under the contract is $0.06 per minute.
The TDCJ Contract requires TDCJ’s consent for the proposed transaction and the eventual assignment of the contract from Preferred to Securus. According to Securus, the TDCJ has given its consent.
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