Corvis Corp.http://www.corvis.com today announced an agreement to acquire Algety Telecom SA http://www.algety.fr, a startup developing long distance optical transport technology, for an undisclosed number of shares.

The deal is likely to stoke up even further interest in Corvis' IPO, announced yesterday.

Algety claims to hold the world record for DWDM systems capable of handling very high bandwidths over very long distances. It demonstrated 1.1 Terabit/s (51 channels of 20 Gbit/s) over a distance of 1,000 kilometers last year and claims to be able to do much better than that now (see Algety Telecom SA).

That's a very big deal for carriers. It promises to eliminate the need for electrical regeneration on long haul networks, halving costs in some instances, at the same time as boosting capacities.

Even before the news of the Algety acquisition, Corvis was considered a hot property by financial analysts. A few months ago, rumors were circulating that David Huber, its president and CEO, had turned down an offer of $10-billion for the company from Cisco Systems Inc. http://www.cisco.com.

A combination of Corvis and Algety - which has similarities with Qtera Corp., the startup bought for $3.25 billion by Nortel Networks http://www.nortelnetworks.com - could push valuations even higher.

By Peter Heywood. international editor, Light Reading , http://www.lightreading.com