McLeodUSA to purchase VPN vendor Intelispan

McLeodUSA revealed last week that it will acquire Atlanta VPN and network services firm Intelispan for $40 million in stock to enhance the competitive local exchange carrier's VPN portfolio.

McLeodUSA already offered customer premises equipment-based VPNs for business customers, but the acquisition of Intelispan should let McLeodUSA deploy VPNs more effectively because Intelispan brings impressive back-office and provisioning tools to the table, says Robert Carlson, an analyst with research firm Current Analysis.

"I don't think Intelispan had much of a customer base or much money flowing in," Carlson says, "so what McLeodUSA has to be interested in is their software system."

The software includes Inteliwatch, a remote network monitoring tool that tracks network hardware and software, and the Automated Diagnostic Tool and One Button Dialer, which are supposed to make the VPN turn-up process more automated.

"This could help McLeodUSA lower their implementation costs," Carlson says.

Intelispan's services will complement the assets McLeodUSA acquired last year in a $2.1 billion deal when it picked up network firm Splitrock Services, Intelispan spokesman Ponder Harrison says. Splitrock is now the data services division of McLeodUSA, providing broadband services to ISPs, telecom firms and companies across the U.S.

Harrison says most of Intelispan's customer base consists of small and midsize companies, although the firm does have some large corporate customers.

In addition to providing hardware- and software-based VPN services, Intelispan offers a suite of managed network services, he says.

When the acquisition closes, probably some time in the second quarter of this year, Intelispan will become a wholly owned subsidiary of McLeodUSA.

McLeodUSA is a facilities-based CLEC that provides voice and data services to retail and wholesale customers across the U.S.

McLeodUSA: www.mcleodusa.com; Intelispan: www.intelispan.com