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From TotalTelecom:
Viatel Broadens Customer Base with Destia Buy
By Vanessa Clark
27 August 1999
Viatel, Inc., European network operator, said today it will buy Destia Communications, Inc., long-distance telecommunications provider, for about one billion dollars in stock and debt. The purchase gives Viatel extra residential and business customers for its existing pan-European network, while also allowing it to enter the Swiss and U.K. markets.
Viatel, which is currently building out its Circe network in Europe, will exchange 0.445 share for each Destia share - worth $18.63 based on Viatel's closing price yesterday - and assume about $400 million in debt. The deal is expected to be completed by the end of the year, said Michael Mahoney, Viatel's chairman, president and chief executive.
Mahoney forecasts $500 million in operational savings over the next five years from the deal: Destia will replace leased fiber with Viatel's own network said Mahoney. Also, "Viatel has little market presence in the Circe countries Switzerland and the U.K." he said, explaining that Destia's presence in those countries will significantly reduce Viatel entry costs.
Viatel will also offer Prestophone, Destia's online pre-paid long-distance phone offering as its first e-commerce offering, said Alfred West, Destia's chairman and chief executive.
"By combining with Viatel, we will now be able to offer our small and medium-sized business customers a wide arrange of services, including IP and ATM-based broadband services, multimedia services, high-speed Internet access and virtual private network serivces," said West.
The combined company will be licensed to provide telecommunication services to 500,000 customers in 10 European countries; have licenses to own and operate infrastructure in seven European countries; interconnect agreements with nine European telecoms providers; and over 3,000 route kilometers of network in service with 5,700 km planned for service next year. The combined group also has over 200 points of interconnection in Europe, U.S and Canada.
"It's consistent with our view that network-based companies will increasingly look to buy retail-based companies," said analyst Blake Bath at Lehman Brothers Inc. told Bloomberg News.
Viatel's Mahoney will continue in his present role, while Destia's West will become Viatel's vice chairman. |
