Ethernet services

CLEC Buys LambdaNet Germany

Insolvent data services operator LambdaNet Communications Deutschland AG has found a white knight in the form of a wholesale voice player 3U Telecom AG, which has acquired 90 percent of the operator.

A number of higher-profile carriers have bid for LambdaNet Germany, including Cogent Communications Group Inc. (Amex: COI) and Interoute Telecommunications, but 3U is the first to offer a price that suited the insolvent carrier's creditors (see Interoute Wants LamdaNet Assets).

The price wasn’t revealed by 3U. However, a source close to LambdaNet, speaking on the condition of anonymity, estimates the price to be between €50 million (US$60.6 million) and €70 million (US$84.8 million) for a carrier with thousands of enterprise customers and 2003 revenues of about €54 million (EBITDA of €16.7 million).

The remaining 10 percent of LambdaNet is owned by an investor group, though 3U spokesman Axel Becker could not provide any further details, or confirm the size of the enterprise customer base.

The purchase puts LambdaNet's founder and chairman Dieter Finke in charge of the data services business at 3U, where he is joined by another key LambdaNet executive, Stefan Krueger, who negotiated the sale.

The acquisition takes 3U into the Ethernet services market for the first time, just as Europe wakes up to the wide-area potential of the service and corporate IT budgets start to grow again (see Europeans Go Crazy for Ethernet Services). Becker says it's likely 3U will seek further purchases of data services business in its other territories, though nothing has been formally decided.

3U has been building a wholesale and retail voice business in Europe during the past four years, and now has operations in nine European countries (Austria, Belgium, France, Germany, Italy, Luxembourg, the Netherlands, Switzerland, and the U.K.) and in the U.S.

LambdaNet is just the latest acquisition for 3U. Last year, it bought OneTel Telecommunication GmbH and the fixed line business of German cellular operator MobilCom AG. LambdaNet Germany had been left out on a limb following the acquisition of LambdaNet France and Spain by Cogent in January (see Cogent Buys the Boss's Network). Cogent CEO Dave Schaeffer had been hoping to add the German operation to his empire, but couldn't settle on a price with LambdaNet Germany's bank creditors. Cogent found another route into the German market in March (see Cogent Adds to Euro Empire).

— Ray Le Maistre, International Editor, Boardwatch

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