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Megapath And Covad Announce Merger
No terms announced -- to close sometime during Q3
by Karl Bode 02:29PM Wednesday Mar 31 2010
Megapath and Covad have announced that the two companies will be merging their operations, depending on regulatory approval. According to a company representative, the transaction will create one of the largest managed service local exchange carriers (MSLEC) in the United States. Terms of the deal weren't disclosed, but the companies say that barring regulatory approval, the deal should close sometime in the third quarter of this year. The combined businesses will be owned by Platinum and MegaPath investors.

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"It seems that Megapath will become the ISP side of Covad and Covad.net will be going away," one source who just attended an internal video presentation tells Broadband Reports.

Both Covad and Megapath were huge players in the early residential broadband market, and should be more than familiar to most of our readers. Like many independent carriers, both companies found it difficult to compete in the residential sector against the nation's deep-pocketed incumbents.

As such, both companies focused more intently on the (at the time) less incumbent-laden small/medium business and managed services market. In some instances, the brush-off of residential customers was brusque, to be polite.

In 2007, Covad was purchased by Platinum Equity for $304 million, a price tag many considered particularly fair given Covad's national reach. Covad currently offers IP broadband services in more than 4,400 central offices nationwide.

"From my understanding, Megapath's network will be integrated into Covad's network for central offices that Covad is not currently in," says our source. "They (in internal meetings) never outright said what would happen in CO's that both companies are in, but I got the impression that the Megapath equipment would be shut down," the source says.

"This transaction brings together two industry leaders who will focus on expanding service offerings and distribution channels to further our leadership positions in the SMB, enterprise and wholesale markets," MegaPath CEO D. Craig Young said in a prepared statement. "By leveraging the strengths of each company, we will provide customers and partners with expanded expertise, broader innovative services and a powerful network that simplifies the way they communicate and conduct business online."

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davoice

join:2000-08-12
Saxapahaw, NC

No info yet on who is the "acquiring" party

No info official info yet on who the "acquiring" party will be though. From everything I'm hearing, Platinum Equity will still be in the drivers seat of the combined entity. That scares me a little given Platinum's love for cost cutting and outsourcing.

}Davoice

56403739
Less than 5 months left
Premium
join:2006-03-08
Naples, FL
kudos:2

Re: No info yet on who is the "acquiring" party

Hands up.

Lets count who cares.

Nobody?

davoice

join:2000-08-12
Saxapahaw, NC

Re: No info yet on who is the "acquiring" party

A lot of small businesses who are on Covad loop DSL and T1s care.

}Davoice

axiomatic

join:2006-08-23
Tomball, TX

Combined to make...

Megapath And Covad Announce Merger and combine to make a Super Mecha Voltron of fail!

Sorry but I had a bad experience with both companies a few years ago. Moved from an area serviced by one only to move to a different state to get the other. Megapath and Covad were basically WHY I started researching what ISP serves a neighborhood PRIOR to looking for houses in an area.

woody7
Premium
join:2000-10-13
Torrance, CA

1 edit

hmmmmm....

I have my dsl through Earthlink installed by Covad, is this a problem for me?
--
edit to add waiting for Uverse to be turned on
BlooMe

e_dub
franknbeans
Premium,VIP
join:2001-08-12
kickin ass
kudos:2

1 recommendation

Re: hmmmmm....

I work for Covad and this is news to me.....................WTF!!!!

woody7
Premium
join:2000-10-13
Torrance, CA

Re: hmmmmm....

Oops
--
BlooMe
Network Guy
Premium
join:2000-08-25
New York
kudos:2
lolz

jimbo48

join:2000-11-17
Hayward, CA
Most likely,
I too have Covad as the Earthlink partner supplying my Slooooow DSL service so any change in ownership will surwely muck up my tenuous provisioning!

damonlab
Premium
join:2001-05-02
Detroit, MI

clec

I'm surprised that either of those companies still exist.
Network Guy
Premium
join:2000-08-25
New York
kudos:2

Re: clec

Ex deuce

SLD
Premium
join:2002-04-17
San Francisco, CA
6 years ago, when BellSouth refused to service my neighborhood in Palm Beach, Covad provided the only "broadband" (I say that laughing) option - a 128Kb, like dual-ISDN frame-relay for about $110/mo. I was thankful for it at the time.

siouxmoux2

@sbcglobal.net
Me too. Covad prices were way too high for their dsl service. Back in the day sbc was $20 dollars less than Covad

KrK
Heavy Artillery For The Little Guy
Premium
join:2000-01-17
Tulsa, OK

Re: clec

That was by design.

Now as the last of the competition dies away, those days of pricing are over.