PC Week has learned that Cable & Wireless (C&W) is getting ready to buy one of Europe's leading alternative telecoms operators, as part of its $1 billion (#600 million) expansion into Europe.
Esprit Telecom, valued at approximately $300 million (#180 million), is the leading contender for acquisition, according to sources close to the deal. C&W is also thought to be considering Carrier One, Diatel and Hermes.
Esprit is one of Europe's new alternative operators and is currently moving into the "carriers' carrier" business by building and selling bandwidth on its own pan-European network to other carriers.
Alan Pyne, director of telecoms consultancy Schema, said: "Europe has been a gaping hole in C&W's service proposition, and acquistion is the best way of gaining market share."
A spokesman for Esprit said an acquisition was not out of the question: "We are way ahead of our competition in terms of rolling out a network which will be appealing to C&W, but we could just as easily do a network share with them."
Analysts agree that buying Esprit would be a good move for C&W. Simon Weedon, telecoms analyst at Deutsche Bank, said: "C&W has been a little slow to react to the deregulated market in Europe, but this might have done the firm some favours. With the ructions going on at AT&T Unisource, C&W has a golden opportunity to get it right. This also puts it in a good position to compete with BT, finally."
C&W's European plans
Cable & Wireless is to spend $1 billion (#600 million) extending and accelerating its expansion into Europe. C&W plans to build an advanced network capable of conveying voice calls, as well as Internet and data traffic, linking 40 cities in 13 countries. The investment will create 1,000 jobs in Europe. It is spending $100 million (#60 million) to buy 7,200km of installed "dark fibre" which is easily turned on as the company wins new customers. C&W plans to double revenues from European corporate customers each year for the next five years. The company expects these revenues to top #3 billion by 2003.
- See Netweek, page 24.
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