Cable & Wireless will invest $1 billion over the next five years in building a high-performance network connecting Europe's key business centres.
The network will eventually link over 40 major European cities with Cable & Wireless' existing infrastructure across the world, enabling the UK carrier to compete with established global carriers like WorldCom and Concert Communications Services.
Cable & Wireless will target the network at multinational businesses in Europe. The company's existing major customers in Europe include Compaq, Anderson Consulting and Black and Decker.
Over the next five years, the UK-based carrier will create a high-performance IP-based fibre optic network connecting 18 European cities and an ATM network connecting a further 10 cities. The combined network will connect with Cable & Wireless' Internet backbone in the US, acquired from MCI earlier this year, and its existing infrastructure in the UK, Europe, Asia, Australia and Africa.
An initial $320 million has been spent on ATM capacity from German carrier Hermes Europe Railtel, capacity on Global Crossing's European fibre optic network, and the equipment that will run on these networks.
First results of Cable & Wireless' expansion will be seen later this year with a voice and data service in Frankfurt and Dusseldorf. The northern European part of the network will be completed late 1999, and southern Europe will be connected by December 2000.
Europe has until now been the missing part of Cable & Wireless' global strategy, according to analysts, and previous attempts to fill the void, including a failed relationship with Telecom Italia, have proved unsuccessful.
"Europe was a black hole in their global plans," said James Bennett, research analyst at CIT Research in London. "They are quite well placed to take advantage of their trans-Atlantic connections as well placed to take advantage of the UK as a stop off point between Europe and the US," he said.
"One reservation is that there are so many pan-European operators in the market," said Bennett. "There may be a superfluity of service providers in Europe."
Cable & Wireless is making an aggressive move into Europe, and hopes to double its revenue growth every year for the next few years, according to Stephen Pettit, executive director of global business at Cable & Wireless.
"We've changed from running corner shops on A-roads to running hypermarkets on global highways," said Pettit. Cable & Wireless will back its growth plans with a pan-European advertising campaign.
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