Cogent Communications Inc. of Washington plans to announce today that it acquired the assets and customers of Fiber Network Solutions Inc., a midwestern Internet service provider, for an undisclosed amount of stock and assumption of debt.
The deal increases Cogent's presence in Ohio, Michigan, Illinois and Pennsylvania, where Columbus, Ohio-based FNSI built its network. It also adds more than 400 customers to Cogent's network.
Cogent, founded in 2000, sells high-speed Internet service to small and medium-size businesses at a flat rate.
Privately held FNSI has 25 employees, many of whom have been asked to join Cogent's 200-person staff, said David Schaeffer, chief executive of Cogent. FNSI's customers will be transferred to Cogent's network this morning.
The acquisition of FNSI follows a consistent pattern for Cogent, which has expanded its national network by acquiring the assets of troubled or bankrupt rivals. FNSI is its sixth acquisition in the past 11/2 years. Cogent also acquired the assets of PSINet Inc., FiberCity Networks Inc., OnSite Access Inc., Allied Riser Communications Corp. and NetRail Inc.
FNSI had not filed for bankruptcy protection, but its operating costs were more than $100,000 a month and it was considered a "distressed" property, said H. Helen Lee, Cogent's chief financial officer. By transferring FNSI's customers to its own network, Cogent will be able to save administrative and network costs, she said.
Cogent, which acquired FNSI through its wholly owned subsidiary, Cogent Great Lakes Communications Inc., will continue to search the market for good deals, Schaeffer said.
"We really have no specific gap in our network at this point, so our focus is adding additional customers to the network," he said.
Cogent, which became a public company through its acquisition of Allied Riser, posted revenue of $16 million in the quarter ended Sept. 30. By comparison, its revenue for 2001 totaled $3 million.
Cogent has about 6,000 business customers. Sixty-five to 70 percent of them are in the largest 21 urban areas, where Cogent has built fiber-optic cable directly into office buildings. With the acquisition of FNSI, Cogent will serve 38 markets.
As part of the FNSI deal, Cogent purchased five data centers in Columbus, Pittsburgh and Detroit to add to the three data centers it already operates.