Telecom companies' merger worries Bell competitors

Westchester County Business Journal, Mar 12, 2007 by Soule, Alexander

Broadview Networks Holdings Inc. is acquiring InfoHighway Communications, creating a telecommunications company with more than $500 million in annual revenue.

The companies did not disclose financial terms of the deal.

InfoHighway adds $120 million in annual revenue to Broadview. Combined, the companies have 1,425 employees and 80,000 business customers from Maine to Virginia.

Broadview is based in Rye Brook, and InfoHighway has its headquarters in New York City. In 2002, the companies inked an agreement for Broadview to provide broadband Internet services to InfoHighway business customers.

InfoHighway was spun out of Avionics Research Corp. in 1992 as ARC Networks and in 2005, merged with New York-based Eureka Networks.

Broadview was founded in 1996 as Community NetWorks, changing its name in 1999.

Both companies filed for initial public offerings of stock (IPO) at the height of the telecommunications bubble in late 1999 and early 2000, only to withdraw the registrations and seek out financing from private equity firms.

The merger is only the latest in a series of deals to roll up Bell telephone competitors in the Northeast. In the first half of 2006, Bell competitors suffered a 4 percent decline in market share, according to the Federal Communications Commission, the first such drop since the Telecommunications Act of 1906 led to a proliferation of such companies.

Last summer One Communications came out of the gates with $800 million in revenue following a triple merger. And Feb. 28 this year, Paetec Holding Corp. acquired US LEC Corp. in a reverse IPO, creating a 2,300-employee company based in Fairport. Michael Robinson, Broadview's chief executive officer, previously was chief financial officer and executive vice president of US LEC from 1998 to 2005.

Paetec also has offices in Purchase and Newburgh.

White Plains-based eLEC Communications Corp. expects to complete this month the sale of New Rochelle Telephone Corp. to Cyber Digital Inc. of Hauppauge; eLEC is now doing business as Pervasip Corp., selling Internet voice services.