Managed services provider MegaPath today announced plans to extend its reach by investing in DSL.net, with plans to buy the competitive carrier.

DSL.net is a broadband service provider operating out of 350 collocation spots in 12 New England and Mid-Atlantic states.

MegaPath officials said they have made a strategic investment in DSL.net that will allow them to acquire the company, pending regulatory and shareholder approval. The amount of the investment was not disclosed but privately held MegaPath said it will require an additional round of funding  from its current investors, including Fidelity Ventures, Rho Ventures, U.S. Venture Partners, Columbia Capital, Trident Capital and Boston Millennia Partners. 

Like other competitive service providers, MegaPath has been working to  build scale within its business, including merging with Netifice earlier this year. That merger closed in May.

The company said it will use DSL.net facilities both to extend the reach of its managed IP services and cut costs. Using DSL.net facilities will provide greater control over service performance as well as over margins and profitability, the company said.

"This strategic investment gives us the opportunity to accelerate MegaPath's growth and improve its profitability, while also providing us with greater control over the quality of service we offer our customers," said Craig Young, chairman and CEO of MegaPath, in a prepared statement.  "We are eager to help DSL.net customers grow their businesses by leveraging our wide array of managed IP services, expanded network reach and additional operational and engineering resources.  Moreover, the combined company would offer the financial strength and market leadership that enterprise customers look for when selecting a service provider to manage their business-critical communications."

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