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Covad was rumored to be unveiling California-based pre-WiMax service this week: Instead, it seems, they acquired NextWeb, a firm that offers service to 3,000 businesses in California and Nevada, including competitive markets like San Francisco and Los Angeles. The AP story says that NextWeb’s service is available in 175 cities and has a reach of 200,000 businesses within its coverage area.
These 3,000 businesses aren’t valued at much: the entire deal is $23 million with the assumption of $1.7 million in debt; it pays out just $4 million in cash. That means the average revenue from each of these customers must be tiny or the revenue-to-acquisition price multiple is tiny. At one-times-cash-flow, each customer would be worth just $7,000 per year on average. I’m surprised at the valuation.
Posted by Glennf at October 5, 2005 9:26 AM
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