SBC to Buy $150-Million Stake in DSL Provider Covad

SBC Communications Inc. will buy a 6% stake in Covad Communications Group Inc. for $150 million as part of a new alliance in which Covad will become a provider of high-speed Internet access for the nation’s largest telephone company. The deal settles several legal disputes between the companies and includes a guarantee by SBC to buy at least $600 million worth of high-speed DSL service from Covad over the next six years. SBC, the local phone company for most of the Southwest and Midwest, will be selling those DSL services both within its 13-state region and in new markets the former Baby Bell plans to enter. The infusion of funds will help Covad with its DSL expansion, which is expected to reach about half of the nation’s homes and businesses by the end of the year. Covad’s battered stock rose $2, or 11%, to close at $20.38 on Nasdaq. SBC rose 88 cents to close at $45.94 on the New York Stock Exchange.