Continuing the recent trend of acquisitions of data center services companies by US telecoms, Windstream has agreed to buy Paetec for about US$2.3bn.

The combined company is expected to generate more than $6bn in annual revenue and about $2.4bn in operating income. It will have a national network with about 100,000 fiber route miles, enhanced capabilities in metro fiber, Ethernet, data center and managed services.

Windstream president and CEO Jeff Gardner said the transaction would advance his company’s strategy to expand focus on business and broadband services.

"The combined company will have a nationwide network with a deep fiber footprint to offer enhanced capabilities in strategic growth areas, including IP-based services, data centers, cloud computing and managed services," he said.

Windstream expects the acquisition to create about $100m in annual pre-tax operating cost synergies and tax benefits of about $250m.

Fairport, N.Y.-based Paetec is a local exchange carrier and provider of data center services, primarily to business customers. The company operates seven data centers and owns about 36,700 fiber route miles.

Both companies’ boards of directors have approved the transaction, which remains subject to regulatory approval and approval of Paetec shareholders. If approved, the companies expect to close the deal within the next six months.

Under the agreement, Paetec shareholders will receive 0.46 shares of Windstream stock for each Paetec share they own. As a result, Paetec stockholders will own about 13% of the combined company.

Windstream’s current annual revenue is about $4bn. The company provides network, data center and managed services in addition to broadband, digital phone and TV services to residential customers. Its network spans about 60,000 fiber route miles.

The transaction is in step with similar recent telecom-data center mergers, including CenturyLink’s acquisition of Savvis and the Verizon’s acquisition of Terremark.