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360networks Barrels Ahead with IPO

Light Reading
News Analysis
Light Reading
4/20/2000

Undeterred by skittishness in technology markets, fiberoptic carrier 360networks Inc. http://www.worldwidefiber.com , commenced its first day of trading this afternoon.

And so far, it's moxey seems justified. Two hours after opening on NASDAQ with an offer of 46.3 million shares priced at $14 per share, 360networks had sold 19.3 million shares, and its price had climbed to $19 per share.

Not bad, considering the carrier had reduced its introductory price per share from $16-$18 to $12-$14 yesterday afternoon. And it's certainly a strong showing in a market where technology investors have been shunning IPOs and their inflated valuations.

Does this mean 360networks' stock is worth buying? To answer that question requires a look at what the carrier is trying to achieve. Its business plan calls for creating fiberoptic facilities between North America and Europe--a market that's expected to explode within the next three years, driven by demand for cheaper ways to link the two continents.

"U.S. companies tell us that inter-continental demand is one of the their biggest needs. And there just isn't enough bandwidth out there," says Erin Dunne, manager of research services at Vertical Systems Group Inc. http://www.verticalsystems.com , a research and consulting firm.

360networks plans to complete the build-out of 37,800 miles of fiber, including 24,100 miles of facilities North America, encompassing 50 cities. It says it's already laid 12,000 miles of this fiber network. Also, the carrier plans 6,100 miles of European fiber covering 20 European cities, and 7,600 miles of transatlantic fiber spanning Boston, Halifax, Dublin, and Liverpool.

This IPO isn't the only sign of life in the burgeoning fiber facilities market. Last week, startup Aerie Networks http://www.aerienetworks.com announced plans to build the largest fiber network in the U.S., covering 20,000 miles and 195 cities (see Aerie Prepares a Feast of Fiber). Like 360networks, whose focus is intercontinental coverage, Aerie has picked a spot-dark fiber wholesaling.

Despite careful positioning, both startup carriers face competition from the likes of Level 3 Communications Inc. http://www.level3.com, Qwest Communications International Inc. http://www.qwest.com , and Williams Communications Group Inc. http://www.williams.com, which all have focused on intercontinental fiber facilities. They also face a growing breed of next-generation European providers, typified by the likes of KPNQwest NV (see Jack McMaster, CEO of KPNQwest).

by Mary Jander, senior editor, Light Reading http://www.lightreading.com

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