Shaw bets on fibre firm
globeandmail.com
PETER KENNEDY
British Columbia Bureau
Tuesday, March 21, 2000
Vancouver -- Shaw Communications Inc. made a $400-million bet yesterday that a two-pronged deal with telecommunications firm 360networks Inc. will make Shaw the most connected cable company in Canada.
Calgary-based Shaw will spend $250-million to expand its high-speed Internet services for its 1.8 million customers by purchasing space on 360networks' fibre-optic networks. "This is going to make us the most connected cable company in Canada," Shaw chief executive officer Jim Shaw said.
Shaw is also taking a $100-million (U.S.) equity stake in the Vancouver company, which until recently was known as Worldwide Fiber Inc. Shaw joins a growing list of investors that includes Wall Street firm Goldman Sachs & Co.
Headed by former Microsoft Corp. chief financial officer Greg Maffei, 360networks builds fibre-optic networks that carry anything from phone calls to Internet data over beams of light moving through glass strands.
Sources close to the company say 360networks plans to provide financing for its operations through a $750-million initial public offering (IPO), as well as a high-yield debt offering which is expected to raise about $1-billion.
A Toronto-based analyst familiar with 360networks said the company could begin the marketing phase of its IPO as early as Friday in Vancouver.
In addition to expanding Shaw's ability to offer a range of services, including digital television, Internet access and cable, Mr. Shaw said the investment also provides the Calgary firm with a window on what 360networks is doing around the world.
A subsidiary of Vancouver-based engineering firm Ledcor Industries Ltd., 360networks is currently working on a 90,300-kilometre-long global network, which includes a fibre-optic terrestrial network in North America and Europe, and undersea cables linking 90 cities in North America, South America and Europe.
Mr. Maffei, who became CEO of 360networks in December, said Shaw typifies the customer who can benefit from the advanced network architecture and breadth of services 360networks is building.
Under the agreement, 360networks will provide Shaw with up to four OC-48 channels between Vancouver and Toronto, capable of collectively transmitting data at up to 10 gigabits per second. 360networks will also provide Shaw with more than 12,000 kilometres of dark fibre on two routes between Vancouver and Halifax, which includes three network rings connecting Vancouver, Edmonton and Calgary; Edmonton, Toronto, Detroit, Chicago, Minneapolis and Winnipeg; and Toronto, Ottawa and Montreal. 360networks provides dark or unlit fibre to companies which then fill it with their own data and voice traffic.
These network products and services will be provided by 360networks over a three-year period, and will replace a portion of the capital expenditure program previously contemplated to meet Shaw's growing demand for broadband Internet backbone capacity.
Mr. Shaw said he won't know until after the IPO how much of 360networks his company will own. However, he said the $100-million investment in 360networks will be funded from the continuing sale of Shaw's portfolio of investments.
"We are delivering on our commitment to provide our customers faster Internet access," Mr. Shaw said. "This network will serve as the national platform for our broadband Internet services, and interconnect our high-capacity video servers across Canada."
On the Toronto Stock Exchange yesterday, Shaw's class B common shares rose $3 (Canadian) to $41. |
