DeltaCom Losses Double as CLEC Preps for EarthLink Takeover

ITC^DeltaCom, the Alabama-based CLEC soon to be owned by EarthLink, widened its losses in the third quarter as it prepares to be absorbed into the ISPs operations.

DeltaCom lost $4.7 million in the three months ended Sept. 30, compared to a net loss of $2.1 million a year earlier. Revenue fell too, from $116.4 million to $110.9 million. At the same time, DeltaComs operating expenses decreased, from $111.1 million to $103.8 million.

The service provider has had difficulty competing amid waning demand for its integrated and wholesale communications services. Indeed, the telecom industry suspected for a while that DeltaCom was ripe for M&A, and the announcement confirming those speculations came in early October. EarthLink is buying DeltaCom for a mere $516 million, or $3 per share a steal considering DeltaComs 52-week high stands at $3.03 and its low at $1.34.

And DeltaComs execs are aware of that reality.

“Our current operational trajectory backed by the scale and resources of EarthLink will drive increased value for all our stakeholders,” Randall E. Curran, ITC^DeltaCom’s CEO, said in a press release.

Together, DeltaCom and EarthLink stand to create an IP infrastructure and communications company serving 14 states in the southeastern United States. DeltaComs fiber optic footprint spans 16,400 miles, with more than 12,400 miles owned or controlled under Indefeasible Right of Use agreements. It includes a 14-state Synchronous Optical Network backbone with 35 metro fiber rings, 294 colocations, and 20 voice and data switches. EarthLink plans to use DeltaCom to strengthen its presence in the über-competitive business-services market.

Theres no set closing date for the EarthLink-DeltaCom deal; DeltaCom will become a wholly owned subsidiary of the ISP, led by EarthLinks Rolla Huff.

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