Comments from VZ are also informative, since VZ uses FLAG's network for a good chunk of their international traffic. VZ also has a seat on FLAG's board, occupied by Tom Bartlett.
Verizon Not Keen to Buy Distressed Assets
PHILADELPHIA (Reuters) - Verizon Communications, the No. 1 U.S. local telephone company, on Thursday said it has no interest in buying distressed or bankrupt fiber-optic network operators because it can lease or buy network capacity without having to own the assets.
``As long as the capacity is available for us to purchase ... we have less need to go out and make any moves toward acquiring these companies,'' Verizon co-Chief Executive Ivan Seidenberg said in a conference call with analysts and reporters.
High-speed network operator Global Crossing Ltd. (NYSE:GX - news) (GBLXQ.PK) and local telephone company McLeodUSA Inc. (Nasdaq:MCLD - news) this week filed for bankruptcy, marking the latest failures in the telecommunications industry. Several emerging companies, already struggling with massive debt loads, slack demand, and price wars, faltered as corporate clients cut back technology spending in the weak economy.
When asked whether Verizon would consider buying distressed companies, Seidenberg said: ``These are things that could be opportunities in the future, but we don't see that the market has yet reached a point where it makes a lot of sense for us to dabble in that.''
In 2000, Verizon agreed to buy a 55 percent stake in NorthPoint Communications Inc. for $800 million, but later canceled the deal after the high-speed Internet access company disclosed financial problems. NorthPoint later went bankrupt and sold its assets at fire-sale prices.
``As the market stabilizes and true values are there and stock prices shift around and we get a sense of where everybody really is, then you need to take a look at whether or not owning some of these things makes more sense,'' Seidenberg said.
Verizon provides some international traffic over networks leased from other companies, ``so I think we can continue down that path, going forward,'' he said.
Earlier on Thursday, New York-based Verizon posted a $2 billion fourth-quarter loss due to the cost of cutting jobs and repairing networks damaged by the Sept. 11 attacks. It said its 2002 revenues would rise about 3 percent to 5 percent. |
