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Covad Acquires DataFlo

SAN JOSE, Calif. -- Covad Communications Group, Inc. (AMEX:DVW), a leading national provider of integrated voice and data communications, announced today that it recently signed an agreement to acquire substantially all the assets of DataFlo Communications, LLC, a Chicago-based broadband wireless provider. The transaction with DataFlo is expected to close later this month and is subject to customary closing conditions and regulatory approvals. By expanding its presence in Chicago, Covad will add a sixth market to its broadband wireless coverage area, in an addressable market of over 170,000 small businesses. The acquisition of DataFlo also complements Covad’s existing broadband coverage area in the Chicago market, enabling the company to satisfy the data, voice, and, now wireless, needs of Chicago-area businesses. The addition of broadband wireless to Covad’s portfolio of services enables the company to target larger businesses with high-capacity service, with data speeds between 2 megabits per second and 45 megabits per second.

“Fixed broadband wireless service is one of Covad’s primary growth drivers and this announcement signals the next phase of our targeted national expansion,” said Patrick Bennett, executive vice president of market development for Covad. “By acquiring DataFlo, we will gain a wireless coverage area in Chicago where there is strong small and medium-sized business growth. DataFlo’s wireless network also complements our existing wireline coverage area in that market. By introducing wireless in Chicago we will also be able to meet the needs of larger businesses with our high-capacity service.”

Covad now offers broadband wireless in 6 markets nationwide: Chicago, Los Angeles, San Francisco, San Diego, Orange County, and Las Vegas.

Covad will acquire substantially all the assets of DataFlo for approximately $1.4 million in cash. For the full year 2006, DataFlo expects to generate approximately $1 million in revenue. In keeping with Covad’s profitability goals, the transaction is EBITDA accretive.

Covad Communications Inc.

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