Speakeasy has decided that the best path is one where it becomes part of two larger companies by agreeing to merge its business with Covad and MegaPath.
The three companies say they are creating what they call a new managed services local exchange carrier (MSLEC) that can offer a suite of "IP voice, security, VPN and Internet services nationwide." Although the service providers did not reveal financial terms, the deal is expected to close in Q3 2010 with the contingency that Covad and MegaPath complete their own previously announced merger agreement. When the deal is completed, Best Buy, which purchased Speakeasy in 2007, will remain a minority investor in the company.
Covad and MegaPath gain a number of benefits by bringing in Speakeasy into its fold. By combining Speakeasy's small business voice and data services with MegaPath's distributed enterprise expertise that will run over Covad's nationwide broadband network, Covad and MegaPath will be able to provide enterprises and small businesses a so-called one-stop telecom services shop. In addition, Covad instantly expands its customer reach to an additional 30,000 small business customers.
The three companies will serve the market through two divisions: a wholesale operating division and a direct, commercial division.
From a larger industry trend perspective, MegaPath and Covad's merger with Speakeasy illustrates the necessary and ongoing consolidation of the competitive telecom service provider market. Consolidation of the competitive telecom market is not just relegated to traditional CLECs alone. As the economic freeze began to thaw in late-2009 and in 2010, cable MSO Comcast and independent ILEC Windstream struck deals to expand their presence in the competitive telecom services market segment.
For more:
- see the release here
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