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The Cloud Drifts Off

U.K. hotspot initiative The Cloud is talking up its credentials as an independent player in the wireless LAN wholesale market, breaking away from parent company Inspired Broadcast Networks following a VC cash injection announced today.

The hotspot startup has secured an undisclosed investment from 3i Group plc and Accel Partners. “It’s a big number,” says The Cloud’s managing director, George Polk. “The money more than finances our current business plan.”

The investment sees The Cloud emerge as an independent business. “It is effectively a buy-out by the new investors,” explains Polk. “Inspired Broadcast Networks will retain a stake in The Cloud but the new investors become controlling shareholders.”

Launched in March last year with the aim of installing 3,000 wireless LAN access points in pubs, clubs, and telephone kiosks around the U.K., Polk claims the company now has “over 4,300 sites operational” and is adding “more than 100 new ones each week.”

Partnership deals with the likes of Boingo Wireless Inc., BT Openzone and Service Factory are designed to drive traffic across The Cloud’s network and allow carriers to launch services without having to roll out hotspots of their own (see Cloud Creates a Storm, Cloud Prepares to Reign, Cloud Looms Over UK Hotspots and The Cloud Covers Europe).

The Cloud is now attempting to break out of its home market, with an emphasis on Europe. “The whole of the next step is to look at building networks in other countries. We have site acquisition teams on the ground in three countries. We don’t have number targets yet. We will only go into these countries if we can build a network along the same lines as what we’ve done in the U.K.”

Polk claims the company is undeterred by the recent failure of rival wholesale wireless LAN network provider Cometa in the U.S. (see Cometa Closes). “We have always run this as a rational business and are happy this market is now operating on a rational level. In fact 3i was one of the main investors in Cometa. They feel comfortable there is a way to make money out of this.”

The Cloud also today announced two additions to its headcount. Peter Elliot has left Orange SA (London/Paris: OGE) to become The Cloud’s Chief Network Officer, whilst ex-Colt Telecom Group plc (Nasdaq: COLT; London: CTM.L) finance director Gerard Small has joined as CFO.

— Justin Springham, Senior Editor, Europe, Unstrung

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