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Earthlink completes their acquisition of One Communications April 6, 2011

Posted by TelUS Consulting Services in CLEC catagory.

EarthLink has put another piece of its super-CLEC business puzzle together as it completes its acquisition of One Communications. Under the terms of the previously announced agreement, EarthLink will pay about $370 million for One Communications, a figure that includes the repayment of $282 million in company debt and issuing about three million shares of EarthLink common stock. Another $21 million will be deposited into escrow to fund potential One Communications post-closing obligations as outlined in the merger agreement.

Focusing on serving multi-location business customers with a mix of MPLS-based IP services, EarthLink will integrate One Communications into its EarthLink Business division. By adding One Communications to its portfolio, the EarthLink Business IP network will span over 28,000 route fiber miles across 27 states with over 1,300 collocation sites, 55 switches and 71 metro fiber rings. The addition of One Communications instantly gives EarthLink an IP network footprint in the Northeast, Midwest, and Mid-Atlantic regions in addition to overlapping connection cities with EarthLink Business (formerly Deltacom) long-haul routes in major markets including Washington, D.C., Baltimore, Philadelphia and New York City.

By purchasing the assets of One Communications, Earthlink’s new challange will be around network integration. Having done over 131 deals over the years, it’s not like EarthLink does not have experience in integrating acquisitions into its residential business fold. To ensure a smooth integration process of Deltacom and One, EarthLink has bolstered its program management group that manages the overall integration program and then each of the functional areas have dedicated people that focus on nothing but the integration process.

It appears another CLEC joints the ranks of the acquisition victims. It would appear that the facilities based CLEC will find a merger partner while the non-facilities based CLEC will continue to struggle with market share. Hang on as the players continue to vie for position.

Joe Buck, NCE

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