Private equity's prison phone-call businesses just got nailed by the FCC
The Federal Communications Commission on Thursday said it will put caps on the costs of calls from prisons. Calls from prisons could cost as much as $14 a minute, before the limits were put in place.
Its bad news for the private equity funds that own these phone-call businesses. The biggest company, called Global Tel* Link, is owned by American Securities.
American Securities, which manages about $13 billion, invested in Global Tel* Link in 2011, according to the fund's website. A spokeswoman for the investor declined to comment.
Global Tel*Link, which was previously owned by Goldman Sachs' private equity arm and Veritas Capital, controls about 50% of the prison call market.
When the FCC first floated the idea of capping call rates, last year, the Wall Street Journal reported that American Securities was exploring a sale of Global Tel*Link. The newspaper cited unidentified sources and said it wasn't clear if the effort to sell the business was linked to the potential regulations.
The FCC said it has now barred most add-on fees imposed by the companies, and took other steps to cut the average rate for inmate calls to $1.65 for a 15-minute call.