Data lures Qwest to Europe
By Leyla Kokmen
Denver Post Online 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.
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