Interoute Buys Fiber-to-the-Pope

Pan-European carrier acquires Roman network that gives it FTTP – Fiber-to-the-Pope

September 8, 2004

3 Min Read
Interoute Buys Fiber-to-the-Pope

Thought FTTP only meant Fiber-to-the-Premises? Think again. Now there's Fiber-to-the-Pope, because that's what pan-European carrier Interoute Telecommunications Ltd. is selling, following its latest asset purchase.

The rapidly expanding operator has splashed nearly €10 million (US$12 million) to buy about 250 kilometers of duct in Rome from Atlanet SpA, part of the Fiat empire. Nick McMenemy, Interoute's head of strategy and business-critical operations, says the purchase gives the carrier fiber to Rome's major business districts to add to its existing metro ring that runs around the city.

"We had a metro ring already, but then we were relying on Telecom Italia to get to buildings, and they're slow and expensive," he says. "We've just won a lot of work from the Italian government as part of a deal that Alcatel won with the Italian defense ministry, and Fiat was reorganizing its finances and looking to sell non-core assets. So now we can transfer customers onto our new network and offer a cheaper and faster alternative to Telecom Italia to other operators and businesses that need capacity in Rome.

"We paid cash for the network, which goes to practically everywhere in Rome that fiber can go, and also gave Fiat a very good deal on international capacity, so we're all happy. Now, for connectivity in Rome, it's either Telecom Italia or us, and we promise to be cheaper and quicker to provision than them. They're the number one, so we have to beat them on price and customer service to win business."

And, of course, there's the FTTP element. "The Vatican is not a customer, and our acquisition was for network only; we haven't bought any user contracts. But if the Pope decided he wanted some dark fiber, then we'd sell it to him!" says McMenemy. Maybe the marketing man should give His Holiness a call (see Skype Calls Out, But Is the Pope In? ).

That connectivity to the Vatican does, though, provide a serious business opportunity. Interoute has just completed a successful contract supplying capacity in Greece to broadcasters covering the recent Olympic Games, and the operator has long been a specialist at providing bandwidth services to media players. "In the event of a media event at the Vatican, we're well placed to provide capacity. We have credibility in broadcasting," claims McMenemy.

The acquisition is the latest event in Interoute's ongoing recovery. In late 2002 it had booked its plot in Europe's carrier graveyard, but the carrier struck a recovery deal with its investors, including Alcatel, and bounced back (see Interoute at Dead End? and Interoute's Back From the Dead).

Since then, Interoute has expanded its network by buying cheap, distressed assets and building out metro rings, and boosted its staffing levels this year to deal with demand for services such as wholesale VOIP and IP connectivity. (See Interoute Buys Euro Network, Interoute Rides Europe's VOIP Wave , Interoute Expands Euro Network, and Interoute Boosts Staff by 20%.)

Now it reckons it can hit €120 million ($144.4 million) in revenues this year, compared with less than €20 million ($24 million) in 2003.

And it's far from alone in eyeing up cheap networks in Europe. (See Via Net.Works Buys PSINet Europe, ETel's Expanding With Huawei, CLEC Buys LambdaNet Germany, Cogent Adds to Euro Empire, Via Net.Works Buys PSINet Europe, and Telenor Buys Tiscali Unit.)

So what's next for Interoute? McMenemy says it's looking to buy more networks. "There are lots of assets out there for sale, and the U.S. carriers in particular are looking to offload network. I'd say the most likely expansion next would be in North America or Scandinavia."

— Ray Le Maistre, International News Editor, Light Reading

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