Following the close of its purchase of ITC^DeltaCom, EarthLink Inc. announced it would combine Deltacom’s fiber operations with the MPLS/IP VPN assets of New Edge Networks, the carrier EarthLink bought in December 2005, to form EarthLink Business.
EarthLink Business will sell products including voice, data, mobile and equipment over an IP network with regional fiber density. A spokesperson for EarthLink said details about EarthLink Business channel programs were pending as Channel Partners went to print. However, an e-mail to agents announced that New Edge Network's President Cardi Prinzi would become executive vice president of sales and marketing for the new company.
EarthLink's merger with Deltacom was finalized on Dec. 8, 2010, and the price grew from the original $516 million to $524 million.
“EarthLink is creating a leading IP infrastructure and services company," EarthLink CEO Rolla Huff said in a prepared statement. “We’ve acquired a business that has meaningful revenue streams, strong gross margins and unlevered free cash flow that positions EarthLink for future strategic value creation."
If EarthLink makes good on rumors that it also will buy struggling CLEC One Communications, then the company appears to be on its way to transitioning from dial-up ISP to national business-services provider, said Brian Washburn, research director of network services at Current Analysis.
That’s because Deltacom covers much of the southeastern United States, while One Communications is positioned within the Northeast, mid-Atlantic and Midwest. With New Edge Networks in tow, EarthLink Business would be on its way to becoming a large, super-regional CLEC. Neither EarthLink nor One Communications returned requests for comment by deadline.
“That would start to get interesting," Washburn said. “But without that context of One Communications, I find the Deltacom transaction, at the rate they were paying, not to be favorable on its own."
