Covad to expand with new capital
Covad Communications will announce on Monday completion of $152 million in financing, as well as plans to expand into five more markets.
The company will expand beyond the San Francisco area to provide DSL-based services in Seattle, Boston, New York, Washington D.C., and Los Angeles and surrounding areas during the next 12 months--passing 5 million homes in all.
Covad's $152 million financing includes private placement of debt and equity. The proceeds will be used mainly to buy and install data-communications equipment for the company's expansion.
"This additional financing will enable us to expand our position in the high-speed data communications marketplace," Covad chief executive Charles McMinn said in a statement.
Industry deregulation and new technologies have allowed companies such as Covad to enter this burgeoning marketing, competing with giants such as SBC Communications, USWest, and Bell Atlantic, among others. Covad faces competition from companies that provide high-speed Net access via cable modems, such as @Home and Time Warner's Road Runner.
Covad's service, dubbed TeleSpeed, provides access speeds of up to 1.5 megabits per second over copper phone lines. It now is being offered to more than 700,000 homes and businesses in the San Francisco area.
The privately held company was founded in 1996 as a so-called competitive local exchange carrier.
Covad is financed by E.M. Warburg Pincus (a major investor in long distance company LCI International), Silicon Valley venture capital firm Crosspoint Ventures, and Intel. (Intel is an investor in CNET: The Computer Network).