Covad, Megapath Get Hitched

The 2010 M&A season continues to heat up.  Today Covad and Megapath exchanged vows, planning to merge their respective networks and produt offerings.  Platinum Equity took Covad private a couple years ago, and since then the company has been further retooled from a reseller of consumer DSL into a managed services provider targeting the SME and wholesale segments with MPLS, VPN, and Ethernet products.  This merger will take them further along that path by adding additional managed products and deepening the overall footprint.  The combined company will reach some 4,400 central offices nationwide, becoming one of the largest of what the company calls the nation’s largest Managed Service Local Exchange Carriers (MSLECs).

I had not heard this one was in the works, but as mergers go this one seems quite straightforward.  Two rather similar fiber-lite service providers are combining to improve their scale and gain cost savings.  Here are the public network maps of both providers:

While the financial details were not provided, the owners of both companies will remain in the picture as owners of the combined company.  There could easily be further consolidation to come in this segment.  There’s always Earthlink’s New Edge Networks, which also has similar infrastructure and addresses similar markets.  There will be quite a bit of integration work ahead, however.

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Categories: CLEC · Mergers and Acquisitions