Canadian international telecom carrier Teleglobe has become the latest operator to file for bankruptcy protection suffering from the tough climate in the international communications market.
The filing came as part of a major reorganisation at the company, which is also to kill its hosting and data transmission services and slash its workforce by nearly 50 per cent.
According to the company, the moves will help to free it from the high costs of its recently built infrastructure, which was constructed primarily for its now-discontinued data and hosting operations.
Analysts see the drastic steps as an attempt to find a buyer for the company's international operation.
"Going back to their core business is just a way to dress up the potential appeal to any suitor," said John O'Keefe, internet services analyst at Current Analysis.
But even that may still not help Teleglobe find a buyer for its international network. "There are other companies out there looking to sell similar assets and not many people looking to buy," said O'Keefe.
Teleglobe's reorganisation will result in 850 job losses, leaving only about 950 employees. US operations have been the hardest hit, with 50 per cent of the job losses. Only 15 per cent are to come from Canada. The company would not say how many UK jobs were set to be cut.
Serge Fortin, Teleglobe's newly appointed chief operating officer, said customers would be notified over the next few days whether or not their Teleglobe services would be cancelled. He also maintained that Teleglobe was currently in talks with a number of potential bidders.
To keep operating, Teleglobe is set to receive $100m of financing from BCE, the Canadian telecom giant that paid $4.75bn in stock and cash to acquire the company two years ago.
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