Storm Telecom Bucks the Trend

The European carrier says it's close to closing a $50 million round

June 12, 2001

2 Min Read
Storm Telecom Bucks the Trend

Storm Telecommunications Ltd. expects to announce a $50 million round of funding in a couple of weeks, demonstrating that not all European backbone operators are struggling with financial problems.

Some $30 million of the funding will come from Soros Private Equity Partners LLC (no Website), one of Storm’s original investors, according to Mark de Simone, Storm’s executive vice president of sales and marketing. George Soros, the famous financier, “is religious about us,” says de Simone. The new round “will mean that we’re fully funded, and we’ve got room to maneuver,” he told Light Reading today.

Soros Private Equity Partners was not available to comment at press time.

News of Storm’s anticipated round of funding slipped out at the launch of the operator’s new service offering today (see Storm Unleashes 'Lightning').

The service, called Lightning, aims to provide complete networks of wavelengths among 12 cities in Europe, based on optical switches from Sycamore Networks Inc. (Nasdaq: SCMR). Initially, Storm will offer STM4 (622 Mbit/s) connections, either as single pipes or as bundles of four STM1 (155 Mbit/s) pipes. Higher bandwidths will be available later.

De Simone says Storm’s capex and operating costs are between 25 and 40 percent of those of carriers with traditional SDH (synchronous digital hierarchy) networks. Storm intends to pass these savings on to its customers -- corporations and other telecom operators -- says de Simone The use of optical switches will also slash provisioning times, from a typical 90-plus days to a mere 15, he adds.

Providing high bandwidths at low, fixed costs will help Storm sell higher-value services, according to de Simone. “Connectivity is just the beginning,” he says.

Storm is building metro networks, linking together multiple points of presence (POPs) in 10 cities. Right now, about 25 POPs are live in London, Paris, and Frankfurt, according to de Simone. This number will increase to 60 by year’s end, he says. Many of these POPs are in colocation centers where potential customers also have equipment. Storm currently offers raw bandwidth only but is planning to launch an IP service, based on gigabit Ethernet switches and core routers, in September.Letter From Europe and GTS Saga Spells Caution in Europe) have turned out to be “a blessing in disguise” for Storm. Customers with shaky service providers have jumped ship and signed up with Storm, he says. Storm’s revenues are on target to reach £95 million to £100 million (about US$140 million) this year, almost double last year’s £52 million, he says.

— Peter Heywood, Founding Editor, Light Reading

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