As previously reported, SBC will purchase 9.4 million shares of Covad common stock, representing 6 percent ownership in the Santa Clara, Calif.-based high-speed Internet company.
The deal comes just days after Covad CEO Bob Knowling announced his resignation. The company reported poor quarterly financial results a few weeks ago.
The telecommunications market overall has been in a downward trend recently as investors have expressed uncertainty about plans brewing at several companies. The slump has affected both equipment makers and communications giants such as AT&T and WorldCom, which have announced significant changes to their business structures and strategies as a result of Wall Street's aloofness.
Covad is building a nationwide network of high-speed, or broadband, Internet connections for businesses and consumers. Its digital subscriber line (DSL) hookups are several times faster than dial-up modems and allow customers to talk on the phone and surf the Web simultaneously.
The investment by San Antonio, Texas-based SBC, a Baby Bell phone company, still needs regulatory approval.