Data lures Qwest to Europe
denverpost.com
By Leyla Kokmen
Denver Post Business Writer
March 27 - Not satisfied with taking the North American
communications industry by storm, Qwest Communications
International is moving into Europe.
The fast-growing Denver multimedia communications company
said Thursday it will buy EUNet International, an Internet service
provider based in Amsterdam, with operations in 13 European
countries.
The deal - $150 million in stock and $4 million in cash - will give
Qwest about 60,000 mainly business customers in Europe, as well
as 400 local employees who know their countries' markets,
regulations and cultures, said Joseph Nacchio, Qwest's chief
executive.
Buying EUNet, he said, will not alter Qwest's pending acquisition
of LCI Communications, which would make Qwest the country's
fourth-largest long-distance carrier.
Industry analysts said the EUNet move returns to Qwest's original
plan to focus on data transmission, as opposed to the traditional
long-distance phone networks it would get from LCI.
"This reminds people that the real impetus and differentiating factor
for Qwest is the provisioning of multimedia and data services,''
said Tom Friedberg, an analyst with Janco Partners in Denver.
Through the acquisition and two capacity-swapping agreements
with Teleglobe, and Cable and Wireless, which give Qwest
undersea data cables to London, Qwest will now be able to route
data to and from Europe over the high-speed, highcapacity network
it's building around the United States. Marketing advantages This,
Nacchio said, will give Qwest marketing advantages in winning
European business customers who access information from servers
located in the United States. The union will also help Qwest sell the
high-speed, broadband data applications it's developing to
multinational companies with operations both here and abroad.
"We wanted to move traffic not just within the U.S., but traffic
coming to the U.S. and traffic transiting the U.S., from Europe to
the Far East and Europe to the U.S.,'' Nacchio said.
While the Internet service provider market in Europe is smaller than
in the United States and is five to 10 years behind the United States
in deregulation, the EUNet acquisition allows Qwest to get in on
the ground floor of the Europe an data market, which Nacchio said
is expected to grow to $55 billion by 2000.
In addition to providing Internet access and high-speed data
services, Nacchio said, Qwest will file to become a phone carrier in
some of the countries in which EUNet operates, to eventually
provide voice services to and from Europe. The calls would travel
over the Internet protocol, in which data is broken up into tiny
packets and transmitted over Qwest's network. "Very intriguing'
Friedberg called Qwest's move into Europe "very intriguing.''
"If you're trying to get to Europe and cover the geography
efficiently, this is probably the best way to do it,'' he said. "It
would appear that EUNet is one of the leaders in having a
pan-European capability.''
EUNet is expected to have revenue of about $75 million this year.
It has operations in Austria, Belgium, Finland, France, Spain,
Portugal, Norway, Sweden, Luxembourg, the Czech Republic,
Switzerland, Romania and Estonia.
Qwest stock closed Thursday at $40, up $0.875. |
