Hoping to bolster flagging revenues, SBC Communications strengthened its marketing ties and floated a $110 million line of credit with Prodigy Communications Corp. Friday.
SBC, a majority owner at 41 percent, has a vested interest in keeping the nation’s fifth largest ISP afloat as it seeks to further enmesh its digital subscriber line and business dial-up deployment with Prodigy’s existing residential dial-up services.
Under the original agreement signed with Prodigy last year, SBC took over the acquisition, billing and customer care of the two companies’ digital subscriber line and business dial-up services. Prodigy, on the other hand, focused on residential dial-up accounts and building out its non-subscriber efforts like email, news, chat and its portal.
The deal Friday strengthens that commitment, with SBC promising to bring Prodigy 3.75 million DSL customers and 375,000 dial up customers and extending the existing contract until 2009. Prodigy will act as a wholesale ISP of sorts, offering SBC DSL and business dial-up, in addition to its residential dial-up accounts, through Prodigy’s Internet services.
Charles Foster, long-time SBC executive and newly-minted Prodigy chairman, chief executive officer and president, said the agreement lets his company focus on moving the ISP forward.
“Prodigy, with a clearer financial future, will continue to enhance its portal to include high-speed offerings such as video e-mail and instant messaging,” Foster said. “Together, Prodigy and SBC will be the two brands that consumers can count on when they want to enjoy the full benefits of the Internet.”
The contract extension comes as a relief to Prodigy officials who were worried about flagging revenues last quarter. As it stands, officials still expect to lose nearly $340 million in 2001.
SBC expects to have all its DSL and business and residential dial-up customers migrated to Prodigy by the end of the year.