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 Covads 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, Covads senior vice president of product solutions planning and priorities, said the acquisition of NextWeb was primarily in response to regulatory uncertainty over the companys 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.