TelePacific Communications will acquire Covad Wireless, a broadband fixed wireless carrier.
TelePacific Communications, a California-based competitive local exchange carrier providing integrated voice and data telecommunications services to the small and medium-size business customer segment in California and Nevada, and MegaPath, a provider of managed IP data, voice and security services in North America, announced a definitive agreement for TelePacific to acquire MegaPath's NextWeb subsidiary, Covad Wireless, a broadband fixed wireless carrier operating in California and Nevada.
Under the terms of the agreement, TelePacific Communications will gain approximately 3,500 broadband fixed wireless business customers in California, Nevada and suburban Chicago through an all cash purchase of capital stock. TelePacific's acquisition of Covad Wireless will expand TelePacific's SMB services into the fixed wireless market with a complementary network footprint.
The company said transaction benefits would include increased availability of high bandwidth products to customers, the ability to provision customers more quickly, and own the "last mile" which reduces dependency on incumbent local exchange carriers (ILECs). A TelePacific release also said the transaction would strengthen TelePacific's position as the number one competitor to AT&T and Verizon for SMB customers in the California and Nevada markets.
"Covad Wireless is an established innovator in fixed wireless broadband delivery with demonstrated managerial and operational excellence," said Dick Jalkut, president and CEO of TelePacific. "Benefits to new and existing customers will be twofold-expanded fixed wireless service offerings and the expertise of the entire Covad Wireless team."
Covad Wireless customers will gain access to TelePacific's business services including converged voice and data networks in California and Nevada, and wide area networking capabilities globally. Jalkut said the addition of a broadband fixed wireless network allows TelePacific to offer quick-to-deploy wireless Internet, and reinforce its business continuity solutions with both wireless and wired network paths.
"Following our merger with Covad and Speakeasy, MegaPath is continuing to refine our business with a focus on providing nationwide access, security and voice services," said D. Craig Young, chairman and CEO of MegaPath. "As a regional offering, Covad Wireless fell outside of our strategic focus, and this agreement ensures that those customers are properly supported."
The transaction is subject to customary closing conditions, including federal regulatory approvals. TelePacific will assume operations responsibility for the Covad Wireless customer base following regulatory approval and closing, expected in the first or second quarter of 2011. The financial and legal advisors to TelePacific were Brown Brothers Harriman & Co. and Gibson, Dunn & Crutcher LLP, respectively. The exclusive legal advisor to MegaPath was Bingham McCutchen LLP. "Throughout the closing process, there will be no impact to Covad Wireless customer service or support," a company release said. "TelePacific and Covad Wireless will work together to ensure a seamless transition of customer service."