OUR PRESENCE AND PROPOSITION
Currently, we believe we are the largest holder of wireless local loop
licenses and spectrum in western Europe. We are present in seven European
countries covering a total population of approximately 153 million. In Germany,
we have secured co-location space for the launch of DSL services in over 596
central offices and plan to launch DSL services through over 100 central offices
in Germany by the end of this year. We have also leased over 10,000 square
meters of space for customer co-location and hosting services. We also operate a
leased 3,500 kilometer fiber optic backbone network covering 21 cities in
Germany. We have launched our wireless local loop services initially in Germany,
Luxembourg and Portugal, which we intend to be followed by Spain, France,
Switzerland and Finland. We are in the process of applying for wireless local
loop licenses and spectrum in other European countries. To date, we have
launched pilot services through our wireless local loop trials in Belgium and
France, commenced wireless local loop services to end users in Germany and
Luxembourg, and together with Teleweb, commenced wireless local loop services in
Portugal. We have signed a nationwide lease in France for existing, unused fiber
optic cable, which we call dark fiber, and plan to deploy a 4,800 kilometer
fiber optic backbone network covering 16 cities in France. We also plan to sign
another 450 kilometer dark fiber lease reaching a further two cities in France
and complete the
network by the beginning of 2001. We are currently planning to deploy a fiber
optic backbone network in major Spanish cities by the middle of 2001. We plan to
create a pan-European fiber optic network by interconnecting our national fiber
optic networks and by establishing connections with cities in neighboring
countries.
We plan to develop an end-to-end broadband communications network in all
major European countries, consisting of hosting facilities, fiber optic
backbones and "last mile" access connections directly to our customers' sites.
Traditionally, incumbent telecommunications providers have maintained control of
the last mile of telecommunications services through their ownership of the
copper telephone lines connecting each business to the telephone network. As
deregulation of the last mile continues, we expect to gain access to the last
mile through the opportunistic use of multiple access technologies which we
believe will enable us to offer cost-effective access technology for our chosen
market segment. Although the choice of access technology will depend on our
customers' requirements, the applicable regulatory regime and the costs of
deploying the specific access technology, in general, we intend to use a
combination of wireless local loop technology, using new microwave transmission
systems, DSL, using existing copper lines, and local fiber optic links. Using
these different access technologies, we intend to provide a full suite of
internet, voice, video, data, value-added services and solutions to small and
medium size businesses.
In addition to targeting small and medium size businesses, we plan to
provide a range of network and hosting services for internet service providers
(which provide access to the internet), content providers (which provide news,
entertainment, resource information and other data), application service
providers (which provide software and other computer applications on-line) and
alternative or non-incumbent telecommunications carriers. These services will
include co-location, managed hosting and distribution of their content and
applications to our small and medium size business customers. We intend to enter
into strategic partnerships with providers of applications, content and systems
integration for the delivery of on-line services to small and medium size
businesses. To date, we have begun to develop strategic relationships with
companies such as Microsoft, Compaq, Siemens and Nortel Networks.
The development of our broadband internet network and services will require
significant additional capital to fund capital expenditures, working capital,
debt service and cash flow deficits. We are currently exploring various
financing sources to meet these capital requirements.
OUR BUSINESS STRATEGY
We are executing our broadband internet strategy in Europe by implementing
the following initiatives:
- developing a pan-European network with integrated broadband local access,
backbone and hosting,
- establishing local operations by hiring local management and forming
partnerships with local companies,
- building strategic relationships through our local partnerships, sales
channel agreements, supplier relationships, application bundling
agreements and systems integration agreements,
- expanding our addressable market through geographical extension, product
and technology expansion,
- developing focused and differentiated products and services using simple,
turnkey broadband solutions,
- implementing a targeted sales and marketing strategy through extensive
market research and appropriate product and distribution strategies for a
particular customer segment,
- emphasizing technology leadership by deploying leading technologies while
emphasizing reliability, proven capability and scaleability, and
- providing quality service through end-to-end network control and focusing
on customer care.
We plan to pursue a combination of organic growth, strategic acquisitions,
joint ventures and investments in order to enhance the implementation of our
business strategy.
MANAGEMENT, PARTNERS AND EQUITY SPONSORS
We have assembled a management team with extensive experience in building
successful telecommunications businesses, including senior management in six
countries. Further, we have signed shareholder agreements with leading European
companies in five European countries. We have teamed with key local businesses
in many countries to aid our obtaining appropriate licenses, to assist in
marketing and to provide other strategic assistance. We believe that our
strategy of hiring local management and forming local partnerships allows us to
acquire assets such as licenses, dark fiber and co-location space more
effectively, build up operations more quickly and benefit from the significant
installed base of customers and distribution capabilities of our partners.
In Belgium, France, Portugal, Spain and the UK we have teamed with local
partners to manage the acquisition of wireless local loop licenses and to
develop the wireless local loop business in these countries once we are awarded
a license. In four of these five countries we hold the largest shareholding in
our consortium. In Portugal, the majority shareholder controls the business.
Currently, we hold wireless local loop licenses jointly with our local partners
in Portugal, Spain and France. In Belgium and the UK, wireless local loop
licenses have not yet been awarded. We, together with these strategic partners,
jointly control these businesses, except in Portugal. In this prospectus, all
discussions relating to the wireless local loop business in any of these five
countries refers to these jointly controlled businesses.
Timothy Samples, our Chief Executive Officer, and other members of our
management have extensive experience in the telecommunications markets. Our
management, including our directors, collectively hold 43.0% of our outstanding
shares on a fully diluted basis. We also have management with significant
experience in many of our proposed countries of operations: in Germany, Dieter
Finke; in Spain, Jose Fernandez Lizaran and Luis Rodriguez Lescure; in France,
Thierry Mileo and Vincent Teissier; in Luxembourg, Peter Sodermans; in the UK
and Switzerland, William Jones; and in Italy, Dario Cassinelli.
Our board of directors consists of our founders and co-chairmen, Lynn
Forester and Michael J. Price, Timothy Samples, our Chief Executive Officer, and
Victor Bischoff, Juan Luis Cebrian, Edward A. Gilhuly, Alan E. Goldberg,
Francois Jaclot, David C. Lee, Sir Evelyn de Rothschild, Lawrence B. Sorrel,
Barry S. Volpert and Helmut Werner all of whom are representatives of our
significant equity investors and/or accomplished European business executives.
Our stockholders include FirstMark Holdings L.L.C., Welsh, Carson,
Anderson & Stowe, Kohlberg Kravis Roberts & Co., Morgan Stanley Dean Witter
Capital Partners, Sandler Capital Management, ABN AMRO Ventures B.V., The
Goldman Sachs Group, Inc., World Online, Credit Suisse First Boston, Groupe
Arnault, Suez Lyonnaise des Eaux, BNP Paribas, the Rallye-Casino Group and
Francarep SA.
FirstMark Holdings is one of our largest stockholders and is controlled by
our co-chairmen. FirstMark Holdings has a distinguished advisory board, which
has provided advice and other assistance in the development of our European
operations and will continue to provide assistance to us in the future. Members
of FirstMark Holdings' advisory board include Vernon Jordan, Dr. Henry
Kissinger, Dr. Nathan Myhrvold, Bert Roberts, Sir Evelyn de Rothschild and
Bernard Smedley.
FINANCING TO DATE
We have raised $661.6 million in equity, including $600 million pursuant to
financing agreements entered into on May 30, 2000.
In addition, on May 30, 2000, we entered into a ten-year finance loan with
Deutsche Bank. The loan is composed of four tranches totaling $445 million
([EURO]480 million). The loan will be used to finance the telecommunication
equipment provided by Siemens and other capital expenditures to build out and
operate our wireless local loop network in Germany.
On January 21, 2000, we entered into a seven-year loan with a consortium of
German banks. The loan is composed of a $10.1 million ([EURO]10 million)
revolving credit line and a $46.2 million ([EURO]46 million) term loan. The loan
will be used to finance the telecommunication equipment provided by Nortel Dasa
for our fiber optic backbone network in Germany. |
