Cogent Communications Group Inc. has acquired a majority of the assets of a private San Francisco telecommunications company, Unlimited Fiber Optics, for $4.8 million.
The deal, which the company plans to announce today, is an all-stock transaction that gives Cogent 67 new, large business customers and an additional network in San Francisco, Los Angeles and Chicago.
Cogent, which is based in Washington, specializes in selling high-speed connections to small and medium-size businesses in office buildings. During the past three years, the company has acquired 10 smaller companies, including assets of PSINet Inc., the bankrupt Internet company based in Ashburn.
With the addition of UFO, Cogent, which had revenue of $59.4 million last year, expects to add $5 million in annual revenue. Cogent employs 240 people and has about 4,300 customers. It will add three employees from UFO to its business.
The company's revenue has been increasing, largely because its prices have remained below its competitors', and because it has focused on the same business niche for the last five years, said David Schaeffer, chief executive of Cogent. In May, it filed to sell $75 million in new shares to the public to raise money to expand in Europe and to repay $17 million of its remaining debt to Cisco, he said.
Shares of Cogent closed at 30 cents yesterday, down 1 cent.