Chattanooga, Tennessee – Chattahoochee Fiberworks is proposing to buy out rival Chattanooga-based Webhosting Inc, saying it wants to get more out of its fiber-optic network.
Chattanooga Fiberworks announced the deal Thursday with a blog post saying it would purchase Webhosts, which provides online hosting services to more than 4 million customers in the U.S. and Canada.
Webhostings declined to comment on the transaction.
Chatham Fiberworks has said its fiber optic network provides faster download speeds and better reliability than its rival.
The Chattanooga-area company offers broadband Internet service for $99 a month or $99.99 a year for a package of services, including gigabit Ethernet and Internet.
The Chattanooga-headquartered Webhosters had been negotiating for several years with Chattanooga Fiberworks, which owns the Internet service, to sell Webhost to the company, but did not immediately comment.
Chittanooga Fiberws’ plan would give Webhost some breathing room as it struggles with a $5.5 billion debt burden and a $1.6 billion budget shortfall that has caused a slowdown in customer traffic.
The company is also facing layoffs.
Webhosting has been in financial trouble for more than a decade.
In 2013, the company filed for bankruptcy protection, saying its debt load exceeded $20 billion.
It filed for Chapter 11 protection in 2015.
Charter Communications Inc, which also owns Webhost, said it will buy Webhost for $250 million to $275 million, based on the company’s revenue.
Charter declined to give a price for Webhost.
WebHosts was founded in 1997 by Matt Jones, who was fired by Charter after it began offering high-speed Internet service to customers in Chattanooga.
WebHosts said it would move to a new home in Chattanooga when Charter bought it in 2013.
The deal comes as Charter faces questions about its performance and investment decisions.
Charter CEO Brian Roberts said in an investor conference call last month that Charter had made “significant investments” in its fiber network in Chattanooga, including $1 billion for fiber optic technology and $1 million for the fiber network itself.
Roberts also said Charter would spend $100 million to buy back Webhost’s existing customers.
Chitanooga FiberWorks said it plans to spend $1,300 a month for Internet and will pay $30 a month in monthly rental fees.
Webpackers said in a statement it will continue to provide customers with a secure, affordable and reliable Internet experience through its Webhost service.
“We are excited to join a company like Chattanooga FiberWorks to further expand our fiber infrastructure, and we look forward to welcoming them into our family,” Webpackers CEO Andrew McAfee said in the statement.
Web host companies said the agreement will help expand Chattanooga’s fiber-to-the-home network and provide additional revenue streams for the city.
They said Webhost is looking for a company that can help it continue to meet the demands of the growing number of Chattanooga homes with Internet service.
Chantilly-based Internet service providers are not required to compete with each other in the Chattanooga market.
But Chattanooga Fiberwireworks has been trying to become more competitive in the area.
The city has long struggled to attract new Internet service companies, and the company said it was planning to invest $400 million in broadband infrastructure to expand its service to more homes.