Covad Acquires Qwest DSL Customers

Covad Communications is acquiring approximately 23,000 out-of-region business DSL customers from Qwest Communications

June 11, 2003

2 Min Read

SANTA CLARA, Calif. -- Covad Communications Group, Inc. (OTCBB:COVD - News), a leading national broadband service provider of high-speed Internet and network access, today announced it is acquiring approximately 23,000 out-of-region business digital subscriber line (DSL) customers from Qwest Communications International Inc. (NYSE:Q - News).

The customers will be offered similar Covad business-class services specifically, TeleSoho and TeleSpeed. Covad's small office/home office solution TeleSoho has download speeds of up to 3.0 Mbps. Covad's TeleSpeed service, with speeds of 144 Kbps to 1.5 Mbps both upstream and downstream, rival those of T1 service at a fraction of the cost.

There will be a 105-day transition period for the Qwest customers. Covad will work with Qwest to ensure that customers continue to receive excellent service and experience minimal disruptions to their service during the transitions. To help customers with the transition, Covad will mail information to each customer within days and will also place calls to answer questions and provide next steps for the transition.

In exchange for the customers, Qwest will receive $3.75 million in cash from Covad, and Covad will release Qwest from an earlier contract that would have required Qwest to buy Covad services with an estimated net present value of $8.8 million. Qwest may receive an additional payment of up to $1.25 million, depending on the success of the migration.

"Qwest is continuing with our strategy to make smart, disciplined decisions to help grow profitable revenue. We believe this agreement with Covad is another step in our execution on that strategy," said Thomas F. Gillett, senior vice president, Qwest corporate development and business strategy. "It is also critical to us that customers continue to receive excellent service. We have worked diligently to create a plan to support a successful and comfortable transition so customers will continue to be well-served."

"A successful transition for these new customers is our number one priority," said Charles Hoffman, president and chief executive officer of Covad. "This agreement represents a significant inorganic growth opportunity. We have the ability to add up to 23,000 new business-class customers to our nationwide network at a very reasonable cost of acquisition. We look forward to serving these customers and making sure they get the best broadband experience."

Most customers are located in California, Delaware, Illinois, Indiana, Kansas, Maryland, Massachusetts, Michigan, Missouri, New Jersey, New York, Ohio, Pennsylvania Texas, Connecticut, Florida, Georgia, Nevada, North Carolina, Louisiana, Wisconsin, Alabama, New Hampshire, and Rhode Island. Less than 250 customers will be affected in Arizona, Colorado, Minnesota, New Mexico, Oregon, Utah and Washington.

Qwest will continue to offer an array of high-speed broadband services to customers outside its 14-state region including dedicated Internet access, Frame Relay, ATM, private line, and virtual private networks.

Covad Communications Inc.

Qwest Communications International Inc.

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