DENVER, May 15, 2006 -- Telecommunications giant Qwest Communications International Inc. announced today that it will acquire privately held OnFiber Communications Inc., an Austin, Texas-based provider of custom-built and managed metropolitan Ethernet and wide-area network solutions, for $107 million in cash.
Under the agreement, Qwest can substitute up to $35 million of the purchase price with shares of its stock until the closing, which is expected to happen in the third quarter of 2006.
OnFiber specializes in high-bandwidth, all-fiber solutions serving primarily large business and government clients. The company operates an all-optical network in 23 cities and offers access and transport services, including Ethernet, SONET and Wavelength protocols.
"We expect the Ethernet market will grow upwards of 50 percent annually; Ethernet has been a high growth product for us in-region, and this increases our participation nationally," said Tom Richards, Qwest executive vice president, business markets group. "For Qwest, this expands our penetration in key markets throughout the country while reducing last-mile costs. It absolutely fits our criteria for a return-focused acquisition."
Because Qwest currently provides similar services in cities within its 14-state operating region, the company said it expects the acquisition to save it $25 million a year through the elimination of overlapping facilities and the reduction of network access costs.
The company said OnFiber expects to post revenues of nearly $60 million in 2006, up 20 percent over last year. In 2005, OnFiber's average revenue-per-employee of nearly $450,000 and its average monthly customer revenue of more than $17,000 was near the top among competitive telecom providers, Qwest said.
For more information, visit: www.qwest.com