Internet provider struggles with loan

A telecommunications cooperative based in Woonsocket (SD) is trying to renegotiate the terms of a $20 million loan it received from the federal government in hopes of preventing a default.

Santel Communications is hampered by ongoing lawsuits with bigger telecoms and is finding it difficult to compete against existing Internet providers in Mitchell. The company received the loan from the U.S. Department of Agriculture in 2004 to create Mitchell Telecom. The USDA's Rural Utilities Service provides grants and loans for broadband services in unserved or underserved parts of the country. Supporters say the money encourages economic development by providing high-speed Internet service to homes and businesses. Ryan Thompson, Santel's general manager, confirmed that officials have been trying to renegotiate the loan for almost a year. But they've had difficulty in determining how to go about it with USDA officials. "How do we deal with this?" Thompson said. "Are we a problem RUS has never had? I think personally that's why it's taken so long." The company is making payments on the loan, he said. According to its balance sheet, it ended last year with $17.1 million in long-term debt. Thompson said Santel has been hurt by ongoing litigation with larger telephone companies over disputes about how much those larger companies should pay to access Santel's network. Those disputes have crimped revenue.