OnFiber Finds $12M

Metro carrier OnFiber Communications Inc. announced today that it has closed a $12 million Series C financing from its existing investors to help with network expansion and acquisitions. The company has raised more than $148 million since its inception in 1999 (see OnFiber Bags $12M ).

OnFiber's main business is to provide connections between carrier points-of-presence (POPs). It also supplies businesses with dedicated fiber connections.

The funding means the company hasn't reached its forecasted goal of becoming profitable and free cashflow positive by the first half of 2004 (see OnFiber Gets Positive Cash Flow).

In a press release, the company said that it is in good shape financially; it says its EBIDTA (earnings before interest, taxes, depreciation, and amortization) is positive and that operating cash flow is positive. But profitable? Not yet.

OnFiber executives did not respond to requests for comment from Light Reading.

The company's CEO, Danny Bottoms, told the Austin American Statesman Monday that the carrier hauled in $32 million in revenue last year. It ended 2002 with about $15 million in revenues and 2001 with about $2.4 million in revenues, according to past company announcements (see OnFiber Gets Positive Cash Flow and OnFiber Boosts Revenue 500%).

With its funding, OnFiber can expand one of its more differentiating services -- called AdaptiveBuild -- which provides custom-made infrastructure for big enterprise customers such as Wal-Mart, Microsoft Corp. (Nasdaq: MSFT), and Cisco Systems Inc. (Nasdaq: CSCO). Such an offering requires some OnFiber to spend more up front, but the carrier's investors feel that the long-term payoff is worth it (see OnFiber Launches High Bandwidth Service).

The new scratch also gives OnFiber the ability to chase acquisitions, which could mean new sources of revenue. The carrier bought the assets of Massachusetts-based C2C Fiber in June, giving it about 350 route miles in some 25 cities and towns around Boston (see OnFiber Acquires C2C Fiber).

It didn't buy anything last year, but the carrier acquired the assets of Sphera Optical Networks and Telseon in 2002. OnFiber's spokeswoman says the company plans to acquire three to four companies to reach additional customers in major cities, similar to the C2C buy (see OnFiber Takes Over Telseon and OnFiber Scoops Up Sphera for $2.3M).

OnFiber says its biggest competitors right now are MCI Inc. (Nasdaq: WCOEQ, MCWEQ) and the RBOCs. But the company also faces competition from other metro carriers, including Cogent Communications Group Inc. (Amex: COI), Looking Glass Networks Inc., and Universal Access Inc. (Nasdaq: UAXS).

OnFiber's investors include Kleiner Perkins Caufield & Byers, Bear Stearns Merchant Banking, TeleSoft Partners, Amerindo Investment Advisors Inc., Level 3 Communications Inc. (Nasdaq: LVLT), GE Capital, and others.

— Phil Harvey, News Editor, Light Reading