Alphabet Inc. (GOOGL - Free Report) owned Google Fiber has acquired Webpass, a gigabit Internet provider currently active in five major cities.
Webpass president Charles Barr announced the deal in a blog post on Wednesday. The financial details of the deal weren’t revealed. Subject to standard closing conditions, the deal is expected to be wrapped up this summer. Google Fiber confirmed the news in a tweet.
Webpass, founded in 2003, is a San Francisco-based Internet service provider. The company provides modem-free ethernet connectivity up to gigabit speed using a combination of point-to-point radio and fiber-based networks. It has a strong foothold in commercial and residential areas.
Opportunities Galore for Google
Currently, Google Fiber is operational in only a handful of cities. The deal will provide Google Fiber access to five major markets served by Webpass namely San Francisco Bay Area, San Diego, Boston, Chicago and Miami. Webpass serves around 20000 customers across these markets.
Google will also be in a position to access large residential and commercial buildings that it has been targeting for long. Competitors like Time Warner Cable Inc. and Comcast have managed exclusive multi-year deals thus locking these markets for years.
So this could be a stepping stone for Google in building a nationwide network and further strengthen its foothold in the broadband Internet space.
Market watchers like us believe that wireless technology is what Google Fiber found most attractive in Webpass. Taking Webpass in its fold is likely to help the company achieve its bigger ambitions with this technology.
Earlier this month, executive chairman Eric Schmidt told shareholders in the annual general meeting that Google is planning to beam ultra high-speed Internet to homes through new cheaper wireless technology.
Google Fiber has been testing new wireless technologies in Kansas City and plans to set up a test wireless network by the end of this year.
How is Webpass Poised to Benefit?
As a subsidiary of Google Fiber, Webpass will have access to Google’s technology and resources, which it can utilize in its market penetration and expansion efforts.
We believe that the acquisition is a win-win situation for both offering them an opportunity to capitalize on each other’s strengths and grow faster in the space than they could separately.
At present, Google has a Zacks Rank #4 (Sell). Some better-ranked stocks worth considering are Facebook, Inc. (FB - Free Report) , CommVault Systems, Inc. (CVLT - Free Report) and Yirendai Ltd. (YRD - Free Report) , each sporting a Zacks Rank #1 (Strong Buy).
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