Qwest Communications International Inc. will add some more fiber to its network diet, announcing that it will acquire privately held OnFiber Communications Inc., an Austin, Texas-based company that runs an optical network in 23 metro areas.
Under the agreement, Qwest will pay $107 million, with an option to substitute as much as $35 million of Qwest shares for cash. The transaction should close in the third quarter.
OnFiber has built up a business in high-bandwidth, all-fiber connections serving mostly large business and government clients in markets where Qwest does not reach.
Acquiring OnFiber’s 23-market network will strengthen the regional Bell operating company’s out-of-region metropolitan coverage and cut costs by reducing reliance on third-party network operators. Qwest said savings could reach $25 million annually.
"This is a sound, complementary deal for Qwest, OnFiber and both companies' customers," Qwest executive vice president, business-markets group Tom Richards said. "This union gives businesses choice in national providers. OnFiber brings a unique approach to delivering and managing custom fiber networks that has proven to be efficient and cost-effective."