Does anyone know anything about DataFlo? According to the press release
it appears they were bought for 1.4x revenue, which seems awfully cheap.
-Matt
Peter R. wrote:
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.
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