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Mergers & acquisitions

MegaPath Still on Growth Path

The new MegaPath Inc. -- formed from the merger of MegaPath, Covad Communications Inc. , and Speakeasy Inc. -- plans to compete aggressively in managed and hosted services for businesses, while maintaining the wholesale business for which Covad was well known.

The new company already had the best month yet for its three operations in August, says Dan Foster, SVP sales for MegaPath. (See Mega CLEC Merger Closes.)

"Churn is down in the aggregated business and bookings have gone up," says Foster, who attributes that to months of hard work by individuals well acquainted with the merger and integration process, including CEO Craig Young, a veteran of 15 such mergers and acquisitions.

That experience will be put to the test again, Foster promises, as MegaPath continues to look for ways to grow, both organically and through further acquisitions.

For now, the new MegaPath is focused on going well beyond the traditional CLEC connectivity play to offer more managed services and to get into cloud computing as well.

"We want to be thought of as the leading provider of IP communications in the CLEC and managed services space," says Dan Foster, SVP of MegaPath. "We see our customers evolving from wanting a simple T-1 to converged services, security, and other things that take advantage of that fat pipe."

That doesn't mean MegaPath will back away from the wholesale business established by Covad.

"We don't see any conflict there," he says. "Covad was already supplying businesses directly. You can't really avoid competing with companies that are also your customers. Verizon Enterprise Solutions , XO Communications Inc. , AT&T Inc. (NYSE: T), and Paetec Communications Inc. (Nasdaq: PAET) -- those are all suppliers of mine and in turn we supply to them. BT Global Services , AT&T, and Verizon are some of our largest customers."

MegaPath will build on Covad's reputation as a wholesaler that is easy to work with to compete in that market.

"They were our supplier and my guys used to talk all the time about how easy it was to do business with Covad," Foster says. "They are known for good products, innovation and high-quality customer service. We remain committed to that as a growth side of the business."

Another primary growth product will be VoIP, which is a cloud-based offering, not requiring premises equipment, Foster says. Expect to see more cloud initiatives from MegaPath, building on its secure connections and on a managed hosting business SpeakEasy was running.

The immediate focus remains on making sure today's customers aren't impacted by the integration of the three companies and growing both retail and wholesale business arms, Foster says.

— Carol Wilson, Chief Editor, Events, Light Reading

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