Covad Communications Group Inc. announced it will acquire the assets of
DataFlo Communications LLC, a Chicago-based broadband wireless provider,
adding a sixth market to its coverage area.
Covad will acquire substantially all the assets of DataFlo for
approximately $1.4 million in cash. For the full 2006 year, DataFlo
expects to generate approximately $1 million in revenue. In keeping with
Covad’s profitability goals, the transaction is EBITDA accretive. The
transaction is expected to close later this month subject to customary
closing conditions and regulatory approvals.
Covad already offers broadband wireless to Los Angeles, San Diego, San
Francisco, Orange County and Las Vegas through its wireless subsidiary
NextWeb, which it acquired earlier this year.
Speaking at the Internet Telephony Conference & Expo today, Claude
Tolbert, Covad’s senior vice president of product solutions planning and
priorities, said the acquisition of NextWeb was primarily in response to
regulatory uncertainty over the company’s access to incumbent broadband
networks. With that concern ameliorated, he said, the DataFlo deal is
more of a continuation of an overlay network strategy.
Broadband wireless allows the company to provide higher-capacity
services. It can offer 100mbps on unlicensed band and 10mbps on licensed
bands – speeds unavailable with DSL. Broadband wireless also enables
Covad to turn up services more quickly, reducing intervals from 25 days
for wireline to 10 days for wireless. It also enables the company to
serve clientele with temporary needs.
Tolbert said the DataFlo network is pre-WiMAX and serves businesses via
a direct sales force. This distribution strategy, he added, will help
Covad to balance its predominantly wholesale focus.
RAD-INFO, Inc. - NSP Strategist
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