Six weeks after their own decision to merger, Choice One Communications and CTC Communications continued their expansion, announcing today they would acquire Conversent Communications, a service provider in the Northeast and in West Virginia. In the process, the merged companies are laying claim to being the second largest competitive service provider in the U.S., after XO Communications.

"We think both scale and density are critical to the success of a facilities-based provider like us," said Ray Allieri, president and chief executive officer of CTC. "This [acquisition] is consistent with what we said at the merger. Conversent is an exceptionally well-run company which has built a strong and profitable business. We talked about building scale, this is starting to build very serious scale in an a effort to compete with the likes of AT&T and Verizon."

CTC and Choice One are now in the process of amending and refiling CLEC applications with state regulators across the country, he added. While not directly addressing the questions of future acquisitions, Allieri said his company will continue to build scale.

"We have a long way to go to catch up to the likes of a Verizon or an AT&T when it comes to scale," he said. "We continue to look at things that make sense from an economic perspective."

The price of the transaction was not announced. It will be financed with equity funding from Columbia Ventures, sole shareholder of CTC, and existing Choice One shareholders, with backing from Camulos Capital LP and Varde Investment Partners. In addition, the companies have a senior secured credit facility from Goldman Sachs Credit Partners LP to finance the rest of the acquisition and refinance existing debt.

Conversent has headquarters in Charleston, WV and Marlborough, Mass., and operates FiberNet in West Virginia.

The combined operation will generate $800 million in annual revenue, serving more than 150,000 business customers representing 1.3 million access line equivalents. Its network will include 10,000 route miles of fiber and approximately 700 collocations.