& cplSiteName &

Interoute Acquires Ebone

Light Reading
News Analysis
Light Reading
7/15/2002
50%
50%

If you thought the saga surrounding the Ebone portion of the KPNQwest NV (Nasdaq/Amsterdam: KQIP) network was over when it was shut down two weeks ago, you were wrong. Today, U.K.-based service provider Interoute Telecommunications announced that it has purchased the principal assets of Ebone (see Interoute Buys Ebone).

In a press release today, privately held Interoute announced that it has signed a deal with KPNQwest’s Dublin-based receivers, McStay Luby, giving it full ownership and control of high-capacity metropolitan area networks (MANs) in eight European cities, including Paris, Frankfurt, Madrid, Zurich, London, Vienna, Milan, and Amsterdam. The company has also acquired backbone infrastructure connecting Munich and Vienna, Turin and Milan, and Frankfurt and Strasbourg. According to an Interoute spokesperson, the company already has a presence in all of the cities, and will use the acquired assets to expand its presence in those cities.

Interoute, which is majority-owned by the Sandoz Family Foundation and which claims to be debt-free, would not disclose the financial terms of the deal.

"We would not be purchasing the assets if it was not a good deal,” is all Les Hankinson, the senior vice president of sales and marketing for the Americas at Interoute, would reveal.

Rumor has it, however, that the company paid only €15 million (today the Euro was trading roughly on par with the US Dollar) for the assets, a fraction of the €645 million KPNQwest paid when it completed its acquisition of Ebone in March. It is also far less than the €25 million and possibly €100 million in debt payments that InTechnology PLC is rumored to have offered for the entire Ebone network. According to sources close to Ebone, that deal fell through two weeks ago because KPNQwest's creditors didn’t think it was enough.

The Ebone network and its assets have been up for sale since Holland-based KPNQwest, which acquired the company in March, filed for bankruptcy at the end of May (see KPNQwest for a Buyer). Before the bankruptcy, Ebone carried approximately 25 percent of all European Internet traffic, and KPNQwest carried close to half.

"Just the Cisco Systems Inc. [Nasdaq: CSCO] equipment is worth €25 million,” says Graham Kinsey, a former Ebone systems operator. “And then there’s the Ciena Corp. [Nasdaq: CIEN] and Alcatel SA [NYSE: ALA; Paris: CGEP:PA] equipment as well… So [Interoute] got a pretty good deal.”

In addition, Kinsey points out, since Interoute is not buying the entire company, it probably doesn’t have an obligation to take on any of the company’s debt. “As far as I’m concerned, [the creditors] were foolish not to take the [InTechnology] deal,” he says.

According to Craig Johnson, an independent analyst based in Portland, Ore., however, it is hard to determine whether or not previous offers would have been better for the creditors. “It is unclear at this time whether the deal was real or made any sense,” he says. “And the underlying structure of the deal may not have been favorable.”

“The timing was more advantageous to Interoute,” says Hankinson, commenting on why the creditors would go for this offer.

One of the reasons the timing was better for Interoute was that the Ebone network was shut down on July 2, after creditors failed to sell it off (see KPNQwest Breaks Its Ebone). Without a functioning network or any paying customers, the value of the company dropped dramatically, and Interoute was able to pick it up for pennies on the dollar. And while a company wanting to run the entire network as it was would have had to spend a large amount of cash to get it up and running again, Interoute will probably simply groom the fiber strands it needs into its existing network, using its own equipment.

In today’s statement, Interoute’s executive chairman James Kinsella says that the asset purchase will allow the company to continue to support customers still using the Ebone network infrastructure. Observers, however, say they doubt there is a single customer still using the network.

“I am not aware of any customers still using the network,” Kinsey says. “But [with an expanded network] Interoute will have more power to attract more customers.”

Interoute was leasing fibers from Ebone before the network shut down. It had also already purchased a small amount of fiber from the company at a far higher price than that it has paid for a majority of the assets now, according to sources close to the company.

As for the rest of the KPNQwest network, Swedish company Telia AB, which has already bought some of the bankrupt telecom’s assets (see Telia Purchases KPNQwest Assets), seems to be the most likely candidate to buy the remainder. Co-parent company KPN Telecom’s bid for the network was reportedly rejected last week. KPN pulled its funding of KPNQwest on Friday (see KPN Drops KPNQwest).

— Eugénie Larson, Reporter, Light Reading
http://www.lightreading.com

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Educational Resources
sponsor supplied content
Educational Resources Archive
From The Founder
Cisco's Conrad Clemson, recently promoted to head up the company's Service Provider Apps & Platforms developments, talks to Light Reading's Founder and CEO Steve Saunders about how he's bringing cloud video, mobile and virtualization together to empower network operators.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
Shades of Ray
Why Analytics Is the Tech World's Digital Glue

3|27|17   |   02:20   |   (0) comments


It was obvious at the massive annual CeBIT enterprise tech trade show that the foundation for tech innovation right now is real-time analytics.
LRTV Custom TV
CommScope – Meeting the Demands of Tomorrow's Networks

3|24|17   |     |   (0) comments


Phil Sorksy, Vice President International at CommScope, discusses addressing the challenges faced by service providers today, and as future trends emerge.
LRTV Huawei Video Resource Center
AMS-IX & Huawei's OSN 902

3|24|17   |     |   (0) comments


Huawei shows how its OSN 902 platform helps the Amsterdam Internet exchange to connect the world using multiplexing.
LRTV Huawei Video Resource Center
Huawei's Smart Energy Innovation Center

3|24|17   |     |   (0) comments


In Nuremberg, Huawei showcases its latest capabilities in the digitalization of Internet resources, network infrastructure and intelligence at its Smart Energy Innovation Center.
Valley Wonk
OFC & Hyperscale: A Good Mix?

3|24|17   |   01:50   |   (0) comments


Cloud and telecom players want different types of equipment for their networks, as the chatter at OFC reveals.
LRTV Custom TV
Etisalat on NFV Journey

3|24|17   |   10:37   |   (0) comments


Etisalat is a service provider that prides itself on bringing innovative technologies to the markets it serves. It was one of the first operators to implement 3G and leads the pack in fiber penetration. Now, Esmaeel Al Hammadi, Etisalat's SVP of Network Development, explains the operator's journey to virtualization, beginning with the network core, as well as the ...
LRTV Huawei Video Resource Center
Huawei at CeBIT 2017: Day 3

3|22|17   |     |   (0) comments


Light Reading reports from CeBIT 2017 in Germany, where Huawei is exhibiting on the application of technologies and key business verticals such as transportation, smart city, manufacturing, media and finance.
LRTV Documentaries
No Regrets: Cox's Finkelstein on Fiber & More

3|22|17   |     |   (0) comments


At the Cable Next-Gen Technologies & Strategies event in Denver, Cox's Jeff Finkelstein examines the cable capex conundrum.
LRTV Documentaries
Cable Next-Gen: The 'Mile High' View From Denver

3|22|17   |   11:56   |   (0) comments


Alan Breznick kicks off the Cable Next-Gen Technologies & Strategies event in Denver, casting his thousand-yard stare over cable's current competitive landscape.
LRTV Huawei Video Resource Center
Huawei at CeBIT 2017: Day 2

3|21|17   |   2:27   |   (0) comments


Light Reading reports from CeBIT 2017 in Germany, where Huawei is exhibiting digital transformation solutions around IoT, smart data centers, OpenCloud ecosystem and its newly announced storage-as-a-service solution.
LRTV Custom TV
Driving Better Mobile Customer Experience While Transforming the Mobile Network

3|21|17   |   7:47   |   (0) comments


Light Reading talked to George McGregor of Citrix about the NetScaler Mobile Gateway - an intelligent traffic management solution which can markedly improve the customer experience provided by mobile operators, even when traffic is encrypted. Critical network services can be consolidated and virtualized using NetScaler. Because of the unique architecture, ...
LRTV Custom TV
Mastercard: What's Next for Mobile Payments?

3|21|17   |   7:49   |   (0) comments


2017 marks the fifth consecutive year for Mastercard at Mobile World Congress and it was a great time to reflect on the amazing advances the payments industry has made as well as discuss "What's Next' in the digital commerce future. We spoke to James Anderson, executive vice president of digital payments at MasterCard, about digital wallets to tokenization to ...
Upcoming Live Events
May 15-17, 2017, Austin Convention Center, Austin, TX
May 15, 2017, Austin Convention Center - Austin, TX
June 6, 2017, The Joule Hotel, Dallas, TX
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
High-Band 5G: Let's Address the Range Question, Shall We?
Dan Jones, Mobile Editor, 3/21/2017
Eurobites: A1, Nokia Turn It Up to 11
Paul Rainford, Assistant Editor, Europe, 3/22/2017
FTTH No Slam Dunk for Cable
Carol Wilson, Editor-at-large, 3/23/2017
Nokia & Facebook Push Undersea Fiber to 32 Tbit/s
Craig Matsumoto, Editor-in-Chief, Light Reading, 3/21/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
TEOCO Founder and CEO Atul Jain talks to Light Reading Founder and CEO Steve Saunders about the challenges around cost control and service monetization in the mobile and IoT sectors.
At MWC 2017, Qualcomm's CTO Matt Grob talks to Light Reading's CEO and Founder Steve Saunders about the progress being made in the development of the technologies and standards that will underpin 5G.
Animals with Phones
Neither Do We Click Here
Is that a prerequisite?
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.