Eureka, InfoHighway Announce Plans to Merge

Eureka Networks and InfoHighway Communications, two CLECs serving SMBs in the northeastern U.S., said today they intend to merge.

The combined entity will have annual sales of more than $100 million, serve approximately 14,000 customers and offer 150,000 access lines in 14 Northeastern and Mid-Atlantic states, the companies say.

The deal is expected to close in early August, once it is approved by federal and state regulators.

The FCCs phase-out of UNE-P rules played a role in the merger decision, says Peter Karoczkai, senior vice president of sales and marketing. But, he adds, keep in mind that both organizations recently signed an Advantage Agreement with Verizon [Communications Inc.] guaranteeing UNE-P for the next three years. So, this would have permitted us to continue to operate as a UNE-P only company, but InfoHighway is getting bigger, and we wanted to differentiate ourselves in the marketplace.

Karoczkai says InfoHighway has been mulling a VoIP deployment; yet, building its own network made little sense. This is why Eureka was such a good match with us, since they already have a carrier-class TDM and VoIP network with thousands of VoIP lines already installed operating in the New York metro area, he explains. The network is based on state-of-the-art technology that does not use the public Internet, so we can control service quality from end to end.

The combined company still will sell Verizon UNE-P and other alternative platforms, Karoczkai adds.

InfoHighway will operate as a wholly owned subsidiary of Eureka Networks and both companies will keep their respective names. Jeff Ginsberg, chairman of Eureka, and Raul Martynek, president and CEO of Eureka, will continue in their current roles with the combined entity. Joseph Gregori, CEO of InfoHighway, will become vice chairman. Eurekas current board of directors will remain intact.

We are very enthusiastic about introducing Eurekas facilities-based voice and data products, especially our voice over IP and hosted PBX solutions, to InfoHighways customer base and partner channel, said Martynek in a prepared statement. We are collaborating with InfoHighway management to adopt the best practices, processes and technology from each company. The result will be a powerful combination that yields significant benefits for all of our customers.