RealTime IT News

Covad Acquisition Augments DSL Services

Covad Communications Co. Thursday acquired LaserLink.net, a leading virtual Internet service provider.

This deal allows Covad (COVD) to provide branded broadband solutions to companies seeking broadband Internet access for their customers.

Covad will issue 4.3 million pre-split shares of Covad common stock for all LaserLink.net outstanding shares and assume outstanding debt. The transaction is valued at $387 million as of Wednesday's market close.

Covad will operate LaserLink.net as a separate business unit after the acquisition closes. George McGovern, LaserLink.net chairman and chief executive officer will continue to head up the operating unit and report to Robert E. Knowling, Jr., Covad chairman, president and chief executive officer.

Covad plans to broaden its service offering for customizable broadband connectivity, targeting personal computer manufacturers, e-tailers, and companies seeking a way to enhance their Internet brand identities.

Robert Davenport, Covad executive vice president of corporate development, said the deal helps it drive the adoption of broadband services nationwide and delivers a key component to Covad's channel distribution strategy.

"LaserLink.net's integrated customer management capabilities will enable Covad to provide a complete solution to a broader range of channel partners, increasing the choice of places where end-users can buy high-speed access to the Internet," Davenport said.

LaserLink.net's George McGovern said Covad's buy out affirms its commitment to branded broadband services.

"LaserLink.net designed its business with the belief that the Internet will revolutionize the way business is transacted," McGovern said. "Joining Covad means that we have the capability to accelerate the promise of the Internet by jointly offering broadband capabilities to our customers."

At the heart of the acquisition is Covad's newfound ability to provide virtual broadband services to a ravenous high-speed marketplace.

Along with providing nationwide DSL network connections, Covad plans to offer the fully branded Internet services including help desk support, Internet access software, e-mail and billing services, news feed and personal web space for subscribers.

Bob Roblin, Covad executive vice president of sales and marketing said LaserLink.net's indirect channel model is consistent with its leveraged channel go-to-market strategy.

"This new distribution channel for Covad means more choice for end-users because it allows end-users to purchase the services they desire from their provider of choice," Roblin said.

In related news, Covad this week introduced its DSL Plus Internet Protocol service bundle as part of its broadband offering to ISPs. By integrating Covad's broadband network with IP services, Covad aspires to become ISPs preferred source for DSL access.

Some of the first ISPs scheduled to utilize Covad's "DSL Plus IP" service offering include Juno Online Services, Prodigy Communications Corp., and 1stUp.com Corp.

Rich Wong, Covad vice president of marketing, said the IP service bundle allows it to provide ISP's with a new set of value-added network services.

"Now our ISPs have a choice that enables them to focus on providing their unique brand experience to end users, while Covad handles the set-up and management of the network infrastructure," Wong said. "In addition, these value-added network services lay the foundation for delivering broadband services such as video and audio streaming."

Covad's DSL Plus IP service is currently available in San Fra