Headlines - September 3, 1999
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SBC and Ameritech Propose Revised Merger Conditions to the FCC
The ongoing saga of the Bells continues as SBC Communications and Ameritech submit revised list of conditions aimed at gaining FCC approval of SBC’s purchase of Ameritech. In June, FCC staff and the companies reached an agreement on a number of conditions aimed at increasing competition in the local telephone markets and improving consumer access to high-speed Internet access. The latest proposals, contained in a letter sent to the FCC are a response to claims by potential competitors that the June conditions did not go far enough. SBC said the most salient of the revised proposal is that the companies are prepared to submit to a fine of $1.125 billion if they fail to meet all the conditions as required, up from the $1 billion originally proposed. In the letter, the companies said they believe that the original conditions "were in the public interest and resolved even the most remote speculative concerns associated with the merger," but that they have agreed to modify their proposed conditions in light of the comments received."
AT&T Completes $5 Billion Acquisition of IBM’s Canadian-Based Global Network Business
AT&T will gain a strong presence in Canada, with the completion of its $5 billion acquisition of the IBM’s Canadian-based Global Network business. The new company, which will be renamed AT&T Global Network Services, the IBM Global Network business is a segment of the AT&T Solutions Group, AT&T’s worldwide network professional management and services unit. Following the original announcement last December, AT&T’s US$5 billion acquisition of the Global Network business is occurring in phases throughout 1999 as legal and regulatory requirements are met in each of the 59 countries in which the global business operates. In the United States, the acquisition of the business including the transfer of employees was completed on April 30.
AT&T Wins $233 Million Telecommunications Contract from Choice Hotels
AT&T has been awarded a $233 million, twelve-year agreement by Choice Hotels International to provide a full range of services including domestic and international long distance and toll free services, digital access and network remote access for calling cards. Under the terms of the agreement, AT&T will provide these services to Choice and its franchisees through AT&T OneNet Service, an integrated telecommunications portfolio. As a result, a single new integrated private network will provide franchise owners of Comfort, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn and MainStay Suites brand hotels affiliates with the advantages of cost efficiencies, seamless technology migration and service flexibility regardless of size or geographic location.
EUROPE
France Telecom Seeks Exit from Global One Alliance
France Telecom is seeking a way to exit from the "bedlam" of the Global One alliance with Deutsche Telekom AG and Sprint Corp. "There are seven or eight ways to get out of this situation," said Michel Bon, chairman of France Telecom. One possibility is that the partners could purchase the entire operation, or two of the partners could join forces to control it, or all three could leave the alliance. Otherwise, a status quo could remain. Further, bickering among the shareholders causes problems for the venture’s marketing division, as it is difficult to convince clients to walk into bedlam.
Telecom Italia to Present Guidelines for Medium Term Strategy
Following one of the bitterest hostile takeover bids in the European telecommunications market, Olivetti SpA will launch a turnaround plan for Telecom Italia SpA. The company will release the guidelines for the drafting of next year’s budget as well as its medium-term strategy budget as well as its medium term strategy on Saturday, September 3. Robert Colaninno, Telecom Italia’s chairman and chief executive officer, will also hold a news conference to discuss the group’s strategy after having met trade union representatives at the industry ministry. Under Colaninno’s proposed plan, he intends to strengthen the company’s Internet interests in both fixed-line and mobile telephony, sell noncore assets, and pursue a strategy of international expansion for Telecom Mobile SpA. In addition, Olivetti plans to breathe new life into Telecom Italia’s former monopoly corporate structure, by cutting 13,000 from its workforce, enabling the company to reduce costs by 4.5 trillion lire within the next three years. One area that Colaninno is most interested in is Telecom Italia’s Internet business, which has suffered from a lack of focus in recent years in the midst of increased competition in Itlay’s Internet service market.
Telecom Eireann Changes Name to Eircom PLC
Proving that Ireland’s telecommunications industry is continuing to evolve, Telecom Eireann will commence trading as eircom plc on Monday September 6. The rebranding of Telecom Eireann to eircom, which is already underway, will be the largest corporate identity change in the history of the country. The decision to radically change the Corporate Identity of the company was the result of a major strategic review of the company’s identity, which began in 1998. The review concluded that a new identity was required to reflect the significant changes taking place in the communications industry and the company. These changes include the development of the business from a telephone company to a full multimedia communications company, going from state to public ownership with listings on the Irish, London and New York Stock exchanges, the introduction of full competition in the Irish telecommunications market, and a strategic shift in business focus from domestic to Irish and international markets.
BBC Launches Free Internet Service
British Broadcasting Corp. has launched a free Internet service, prompting private sector complaints that the service raises competition and regulatory concerns. This move comes as the United Kingdom regulatory begins to review the BBC’s public financing. However, Rupert Gavin, chief executive of BBC worldwide, argues "no public funds" would be used to finance the new service, known as freebeeb.net. The profits made from the venture would be funneled back to the BBC as with earnings from other BBC Worldwide ventures, including licensing of the Teletubbies.
Viag’s Bischoff Says Merger with Veba is a Good Match
The vice-chairman of Viag’s supervisory board Werner Bischoff asserted that Veba AG and Viag AG would be a good match for a merger. Bischoff recently told the German Press Agency that he could not provide details on how far the talks between the companies have progressed, adding that so far no concrete details have been communicated to supervisory boards. It has not been decided when Viag’s supervisory board will be informed of progress, noting that the next meeting of the board is scheduled for the end of September.
Vivendi’s Cegetel Unit Revenue Rose 62 Percent
Cegetel, the telecommunications unit of France’s Vivendi, reported a strong surge in growth during the first half as revenue rose 62 percent to 1.94 billion euros. The unit posted an operating profit for the half year of 101 million euros, compared with an operating loss of 56 million euros a year earlier. Sales from the group’s SFR mobile phone unit rose 50 percent to 1.74 million euros, which by June 30 the company had about 5.24 million mobile phone subscribers, up from three million in 1998, and 700,000 fixed line long-distance subscribers, up from 200,000.
CPU Softwarehouse and Poland’s Computerland in Distribution Alliance
CPU Software AG and Polish software company Computerland have an agreement in which Computerland will market CPU’s products in Poland. Computerland currently has six subsidiaries, with four offices in Warsaw and eight other offices in Poland.
INDIA
VSNL to Establish Web Farm for Local Internet Firms
Videsh Sanchar Nigam Ltd. (VSNL) will establish a 'Web Farm' to host Indian Internet sites through a group of 100-120 servers in numerous locations throughout the country. This move will lead to tremendous benefits in low Internet bandwidth cost, resulting in lower tariffs, creation of critical mass.
VSNL Revises Agreement with British Telecom on Regional Hub
Videsh Sanchar Nigam Ltd. (VSNL) has revised its plans to set up a regional hub in a joint venture with British Telecommunications (BT). Since it is no longer viable to re-file phone traffic as accounting rates come down, VSNL is looking at value-addition and a larger frame in terms of collaboration and marketing. Through their joint venture, the companies are planning to rope in other global telecom majors at a later date.
Department of Telecommunications Seeks AG's Opinion on Non-Compliance by Licensees
The implementation of the New Telecom Policy has sunk deeper into a quagmire as a hopelessly confused Department of Telecommunications has sought a reluctant Attorney General's (AG) opinion on over a dozen cases of non-compliance by the operators. The cases range from partial payment and non-payment of license fee to penal interest on delayed implementation of roll out plan and also non-fulfillment of obligation to provide phones to villages. The DoT submitted a status report to AG and explained that without the latter's permission offer letters to migrate to revenue-sharing regime could not be issued to the operators.
Cyberworks to Launch Internet over Cable Service
Founder of STAR TV Richard Li is coming to India to provide broadband Internet services through his company Pacific Century Cyberworks, which the company’s overall plan is to provide services to 110 million subscribers in Asia, mainly India and China. Cyberworks will use the existing cable TV networks to provide Internet-based services in India. It will tie up with local cable operators, who will be linked to the Internet via satellite. Cyberworks plans to start providing services from the first quarter of next year. It is expected to charge a subscription fee of about US$40 per month per subscriber. Under its business plans, the main revenue of the company will come from subscription fees and advertisements.
Telecom Regulatory Authority May Reduce Cellular Rentals and Call Rates
The Telecom Regulatory Authority of India (TRAI) is finalizing a package to reduce the rentals for cell phones and the airtime charges for cellular calls. This proposal is due to the recent migration of private operators to the revenue-sharing regime. TRAI has also suggested an increase in the pulse rate from 20 to 30 seconds. This proposal, together with free incoming calls, effectively translates into a 33 percent tariff cut for outgoing calls and over a 20 percent cut in monthly rentals. Separately, the charges for calls made form a normal landline phone to a cell phone, which will be applicable as soon as incoming calls on mobile phones are made free, will also be slashed by around 30 percent.
VSNL Seeks Cyber Laws and Secure Infrastructure
Videsh Sanchar Nigam Ltd. and few other companies are pitching for key issues like cyber laws, setting up of a regulatory agency and secured infrastructure and reliable networks. Although business-to-business and business-to-consumer trades are taking place, the payment part remains unclear for want of laws on digital signatures.
JAPAN
British Telecom and AT&T Complete Acquisition of Stake in Japan Telecom
British Telecommunications and AT&T have completed the joint acquisition of a US$1.9 billion stake in Japan Telecom, making a further step in the consolidation of the global telephone industry. Under the terms of the agreement, which was announced in April, BT and AT&T will jointly own 30 percent of Japan Telecom, the number 3 long-distance telephone company in Japan.
NTT Communications to Launch International Long Distance Service
NTT Communications, the long distance carrier established by reorganization of Nippon Telegraph and Telephone, will launch its own international long-distance service on October1. This will be the first time that an NTT company has offered regular international phone services.
WIRELESS
Bell Atlantic’s Wireless Customers Surpass 10 Million
Bell Atlantic Corp. reported that its wireless group’s total number of customers has passed the 10 million marks, consisting of more than 7 million US customers and over 3 million international customers.
Headlines - September 2, 1999
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STM Electronics Launches US$2.64 Billion Public Offering
STMicroelectronics, a computer chip maker with operations in France and Italy, launched a $2.64 billion public offering in the effort to shift majority ownership of the company into shareholders’ hands. One of the sellers included France Telecom, whose Chief Executive Michel Bon, highlighted problems at the company’s Global One international telecommunications venture with Deutsche Telekom AG and Sprint Corp, announcing that the unit’s shareholding structure will most likely change in the near future. STM’s offering will reduce the holdings of four major investors, including CEA Industrie, France Telekom, IRI SpA and the Italian treasury to about 10 percent each from 14 percent. Included in STM’s 28.6 million share offering, which is expected to be completed by September, are 2.6 million newly created common shares. Also, the company will offer convertible securities worth approximately seven million shares and grant underwriting investment banks the option to purchase over five million shares of stock and convertible securities to cover overallotments. France Telecom plans to use the proceeds of the offering to fund its own international expansion efforts. In particular, France Telecom has expressed an interest in acquiring German digital mobile telecommunications company E-Plus Mobilfunk GmbH, in which both RWE AG and Veba AG own a combined 60.25 percent holding.
Lucent Technologies Wins $250 Million Software Contract from MediaOne
MediaOne has awarded Lucent Technologies a $250 million contract to supply communications systems and software to enhance its U.S. network. Under the five-year agreement, Lucent Technologies will provide switching and optical networking systems, plus communications software. MediaOne will incorporate Lucent's solutions into its Broadband Hybrid Fiber Coax (HFC) network to offer customers local telephone, high-speed Internet, and Broadband TV services simultaneously over a single network. Under the terms of the agreement, Lucent will provide its flagship 5ESS(r) Digital Switch that will allow MediaOne to handle voice, data and video in a cost-effective and seamless way. Currently, MediaOne has 5ESS Switches in its U.S. network and will add additional 5ESS Switches as it expands its network. Also included in the agreement are Lucent's Optical Networking SONET-based solutions.
Global Crossing Makes Move to Sweeten Bid for Frontier Communications
Faced with a sinking stock price, Global Crossing is making a new offer to acquire Frontier Corp. in a move to save its deal for the phone company. According to those close to the situation, Global Crossing has offered to exchange two of its shares for each share of Frontier. During the past three months, Global Crossing’s shares have fallen 50 percent, brining it below a "collar" of $34.56 built to protect Frontier shareholders. If it goes beneath that level, Frontier can cancel the acquisition. Global Crossing’s stock has not traded at that level since the beginning of August, and speculation has mounted that Global Crossing might need to step up its offer with additional stock or cash to salvage the deal. In Global Crossing’s latest offer for Frontier, the value would be at $54 a share based on Global’s current stock price of $24, or about $8.4 billion, far below Global Crossing’s original offer of $63 share, or $11.1 billion. However, that offer was contingent upon Global
Crossing’s stock not falling below the collar. Under the terms of the new offer, Global Crossing shareholders representing about 75 percent of outstanding shares outstanding would agree to hold onto their shares until at least April 2000. Then Frontier would agree to cancel its right to abandon the deal, and Global Crossing would agree to buy back $500 million in stock after the deal’s close.
Submicron Systems Corp. Files for Bankruptcy Protection
Submircon Systems Corp, a semiconductor maker based in Allentown, PA, has filed for bankruptcy protection and agreed to be acquired by a management group called Akiron LCC for $55.5 million.
BRAZIL
Universo On Line Files for Bourse Listing
Universo Online, Brazil’s largest Internet service provider, has filed for a stock exchange listing. The ISP has filed to quote on the stock exchange as UOL Inc SA with initial market capitalization of R$10 million. UOL, which is jointly owned by publishers Folha and Abril with about 455,000 subscribers in 105 Brazilian cities, is seeking investment opportunities in the Internet services sector but is not looking for strategic partners.
Alcatel Wins Two Contracts from Embratel Participacoes SA to expand its Long Distance Network
Alcatel has won two contracts worth about 440 million ffr from MCI Worldcom’s Embratel Participacoes SA to expand the Brazilian carrier’s long distance telephone network. The first contract calls for Alcatel to supply WDM systems to increase traffic capacity throughout the south, southeast and northwest of Brazil. And the second contract calls for the supply of mobile transmitters and receivers with capacity of 155 Mbps for their wireless telephone network. The wireless network is being developed to provide access to Brazil’s main transmission highways and 50 regional links will be created in the coming months for long-distance calls.
Starmedia Network and AT&T Corp. to Launch Internet Service
In the effort to establish its own presence in the Latin American telecommunications market, AT&T has joined forces with Starmedia to launch a joint Internet service venture in Brazil that it plans to extend into other major Latin American nations. Starmedia, which already has a significant presence in Latin America, plans to expand its reach into Argentina, Chile, Colombia and Mexico by the end of the year. AT&T will mange the network in Brazil and Starmedia has the option to use AT&T’s network throughout Latin America.
EUROPE
Telia and Telenor May Have to Sell Cable Operations to Gain European Commission’s Approval of Pending Merger
It looks now that the only way the European Commission will accept the terms of the Telia and Telenor merger will be through the sale of their cable television operations. According to one unnamed source, "While it is the companies’ responsibilities to offer remedies, they have not offered any which are sufficient so far. I simply can’t see anything that the companies can offer," to solve the dominant position the new entity will have in media distribution. The commission believes the arguments presented on August 18 by the companies, which do not include the divestment of their cable operations, are still sufficient, and both parties have until to offer final remedies.
Telefonica Beats Expectations as Earnings Rise 73 Percent
In the face of new competition in its home base and weak economies in Latin America, Telefonica came out on top with a 73 percent increase in earnings from last year. However, analysts expressed concern over whether Telefonica could sustain 30 percent profit growth without higher growth in sales.
Bavaria Shows Support for Veba and Viag Merger
The proposed merger between two of Germany’s largest utility companies may have white knight in the corner as the state of Bavaria, Viag’s largest shareholder, said it would support the deal. Bavaria’s finance minister said that the terms of the merger seem to make a lot of sense. The merger, if completed, would take place in the fall. Discussion with other potential partners for Viag is continuing, but he would not comment further. Neither company is denying the merger negotiations, nor is it a confirmation.
Deutsche Bank and Nokia to Jointly Develop Mobile Banking Services
Making a move into online banking, Deutsche Bank has joined foresees with Nokia to develop mobile banking services. The new agreement, one of several that Nokia is hoping to seal with banks in Europe, will enable the German bank to offer basic services, such as account balances and fund transfers, using the Wireless Application Protocol, which enables Internet access via a mobile phone. It is not known exactly when the bank will begin offering the service.
Fantastic Demonstrates First, Live, End-To-End Broadband Multimedia System via Digital Terrestrial Broadcast
The Fantastic Corporation presents a live demonstration of its end-to-end broadband multimedia system via digital terrestrial broadcast (DVB-T) in a cooperative effort with Deutsche Telekom, at the IFA '99 conference, from 28 August through 5 September. Scheduled to run for the duration of the conference (28 August to 5 September), the dynamically updating demonstration of Fantastic's software platform over DVB-T (Digital Video Broadcasting - Terrestrial) highlights the strength and comprehensiveness of the Fantastic system, as well as the successful implementation and rigorous testing behind it. The multimedia content is also updated daily in near real-time during the show. Content for Eurosport, ZDF, n-tv, ARD Online, Berlin.de, Deutsche Telekom Project DVB-T, and BMW are providing the live demonstration. Additionally, Fantastic will be delivering its new suite of Broadcast Media Channels (News, Travel Choice, Finance, Total Weather), with continuously updated content provided by Reuters, Accuweather, Bridge Information Systems, and Landmark Travel.
FIBER OPTICS
Lucent Technologies Receives 61 Percent of SpecTran Shares
Upon the expiration of its tender offer for SpecTran Corp. on Tuesday, Lucent Technologies received approximately 61 percent of the company’ s outstanding shares. On July 15, Lucent agreed to pay $64 million plus the assumption of debt in all-cash tender offer for the acquisition. Lucent expects that SpecTran will call a special shareholder meeting to approve the merger.
INDIA
VSNL Plan to Make India Hub for Asia
Videsh Sanchar Nigam Ltd. (VSNL) is in the process of making India the global hub for Internet and telecommunications traffic into Asia and the Far East. The telecommunications giant is considering forming alliances with other telecom majors to form the much-needed network. VSNL yesterday entered a joint venture with Singapore Telecom to launch a new initiative on managed international private leased lines. A few days earlier it announced a joint venture with British Telecom for frame relay services. A growth rate of about 40-50 per cent is expected in the international private leased line communication. The arrangement with Singapore Telecom is a half circuit arrangement with revenue for the Indian half of the circuit being collected by VSNL and Singapore Telecom collected by VSNL and Singapore Telecom collecting the other half from Singapore. The services are expected to be used by software companies, call centers, transcription companies to send data across the world. Singapore telecom has invested about 100 million Singapore Dollars into Asia Pacific while their investment into India is about one million Singapore dollars.
VSNL and Singtel Launch Private Leased Circuits
Videsh Sanchar Nigam Ltd. (VSNL) and Singapore Telecom (SingTel) jointly launched international private leased circuits (IPLC) between India and Singapore for easier connectivity to transit data. VSNL and SingTel will use advanced network management tool to enable both the companies to view the international leased circuits status from end-to-end. The new state-of-the-art facility will enable fault detection, location and rectification in a proactive manner. The initiative was launched with the signing of an agreement between VSNL chairman and managing director of global business of SingTel, Victon Kwok n Mumbai.
Department of Telecommunications Better Prepared than British Telecom to Face Y2K Problems
The International Telecom union (ITU) argues that the Indian Telecom sector is better prepared to face the Y2K challenge than British Telecom. Telecom commission member PS Saran said the ITU remark illustrates the overall preparedness of the telecom sector in India. DoT is in the process of finalizing a contingency plan by September 15 and planning to set up control rooms at headquarters, state capitals and other centers form December 29 onwards.
Department of Telecommunications Projects INR 30 Billion Annual Loss
The Department of Telecommunication (DoT) and Mahanagar Telephone Nigam Ltd. (MTNL) along with six private basic operators are destined to run in huge losses in the event of 'calling party pay (CPP) regime coming in effect. DoT alone is likely to incur an annualized loss of over INR 30 billion calculated on the basis of 1997-98 when the total metered calls stood at 11,7.7090 billion. The average loss to DoT computed on the 10-minute call duration stood at Re 0.30. The CPP regime is scheduled to become operational from November 1, 1999. According to the TRAI consultation paper released on Tuesday, calls from fixed to cellular mobile will have a double pulse on answer and the subsequent metered calls will be charged on the basis of single pulse. The pulse rate for local calls will be reduced from 3 minutes to 2 minutes.
Private Internet Operators Running Out of Bandwidth
Videsh Sanchar Nigam Ltd. is presently unable to meet the cost of international bandwidth, and expects only the break-even once it increases this to 350 Mbps. "The average cost will come down when the take another 155 MBPS," said VSNL's chairman-cum-managing director Amitabh Kumar. This follows the drastic reduction of monthly charges reduction of monthly charges VSNL has to pay-form the earlier $33,000 to $16,000. Estimating a total requirement of Internet bandwidth to the tune of 530 MBPS by the end of the fiscal year, VSNL has already purchased 155 MBPS from Japan on the Japanese-USA line, a month back. According to VSNL, bandwidth requirement is expected to practically double to 1,064 MBPS by March 31, 2001. Presently, of VSNL's total bandwidth of 165 MBPS, 40 to 50 MBPS are for ISPs alone. This is expected to increase by another 250 MBPS by the year-end.
VSNL to Invest INR 4 Billion in New Voice and Data Network
Videsh Sanchar Nigam Ltd. (VSNL) is planning to spend INR 4 on installing a new voice and data enabled network in the country as well as shoring up its Internet networking. VSNL has leased 34 Mbps of cable bandwidth and 8 Mbps of satellite bandwidth form Intelsat each at Mumbai, Delhi, Calcutta, Chennai and Kochi. In addition, VSNL is deploying an eight-node ATM network in the country, which may help it to move into the lucrative domestic long distance telephony market. The monopoly of the Department of Telecommunications over domestic long distance telephony will be officially broken up on January 1, 2000.
JAPAN
KDD Submarine Cable Systems and Pacific Gateway to Jointly Sell Fiber Optic Circuits to International Carriers
KDD Submarine Cable Systems and Pacific Gateway Exchange Inc. will jointly launch a company to sell high capacity fiber optic access to international submarine cables. KDD-SCS, a unit of KDD Corp., Japan’s largest international telecommunications carrier, announced that the joint venture with PGE, a US long-distance carrier, will begin operations by beginning of 2000. The new company will be based in October in Tokyo with PGE owning 51 percent and 49 percent owned by KDD-SCS. It plans to build a fiber optic circuit that will connect its network center, to be established in Tokyo’s Shinagawa Prefecture. Foreign carriers operating in Japan, for example, will be able to link their networks in the Tokyo metropolitan area with the Trans Pacific cable purchasing access from the new company instead of building their own lines to the submarine cables.
PSINet Subsidiary PSINetworks Japan Wins Type-1 Telecommunications License
PSINEtworks Japan, a newly formed subsidiary of PSINet, will receive a type-1 license from the Ministry of Posts and Telecommunications. The new license allows the company to own such telecommunications facilities as circuits and equipment rather than having to lease them from other carriers. The company applied for the license to expand its local operations into a facilities-based ISP. Initially, PSINetworks Japan will provide international high-speed circuit services using capacity it already owns on the Japan US Cable Network system, which will be operational in 2000.
SATELLITE
Leo Mondale Resigns as Iridium’s Chief Financial Officer and Company Appoints Experts to Manage Restructuring Effort
Iridium LLC announced that it has retained Alvarez & Marsal Inc. and two of its managing directors, Joseph A. Bondi and David R. Gibson, to participate in the company’s financial restructuring reporting to CEO John Richardson. Bondi will be chief restructuring officer and Gibson will serve as interim chief financial officer, replacing Leo Mondale who has resigned.
Headlines - September 1, 1999
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New York Regulators Reject Bell Atlantic’s Claim that Local Lines Are Open
The ongoing saga of Bell Atlantic’s aspirations to enter the New York and Massachusetts long-distance markets hit another snag yesterday as regulators opposed the company’s claim that its local lines are open to competitors. In both New York and Massachusetts, the Baby Bell must prove to regulators that it has opened up its network for local competition to gain federal approval to offer long-distance service. Because the company uses many similar operating systems in Massachusetts and New York, how the New York State regulators rule will likely carry weight with their Massachusetts counterparts. New York Attorney General Eliot Spitzer argued that the state "would be hard pressed to conclude that the New York market is fully open to competition." But again, Bell Atlantic’s New York president, Paul Crotty says otherwise. He said that the one million local lines served by rivals are a sign that New York’s local phone market is open to competition.
IBM Wins $2 Billion Components Contract from Cisco Systems
As the company makes its foray into the burgeoning components business, International Business Machines won a $2 billion, five-year contract to supply Cisco with chips and parts. Cisco also awarded IBM a multi billion dollar contract to help maintain customers’ computer networks. Cisco in turn will acquire patents to nor IBM would comment on that part of the deal.
Tyco International to Acquire AFC Cable for $575 Million
Following Thomas and Betts dropped out of the bidding contest, Tyco International reached an agreement yesterday to acquire AFC Cable Systems of Providence, RI for about $575 million in stock. During the past two years, Tyco chairman has been purchasing numerous companies as part of his mission to beef up the company’s four main business units, which include electronics, medical, security and flow control valves. Under the terms of the agreement, AFC Cable shareholders will receive Tyco stock valued at $45 a share for each AFC share, a 10 percent premium to AFC’s closing price on August 31. This is 26 percent more than Thomas & Betts’s offer, which decided to abandon its bid to acquire AFC.
PictureTel Renames Norman Gaut to CEO after Chief Resigns from Post
Following the resignation of Bruce R. Bond, PictureTel Corp. has renamed Norman Gaut as chairman and chief executive office of the company. Gaut, was previously the chairman and CEO of PircutureTel, for more than 10 years until he retired last June. Bond joined PictureTel as CEO and president from ANS Communications, where has was CEO. In June 1998, Bond took on the additional role of chairman of PictureTel. In the face of rapidly changing market for videoconferencing gear, PictureTel has struggled to keep itself afloat in recent years, with a report of disappointing earnings so far this year. Company stock has fallen from about $40 in mid-1996 to the single digits.
BRAZIL
Motorola to Invest $60 Million to Enlarge its Brazilian Factory
Motorola Inc. will invest $60 million by the end of the year to enlarge its production plant in Brazil. The company expects to hire about 400 new employees by the end of 1999 as a par of the development of its Jaguariuna, which specializes in making cellular phones and pagers.
Ericsson Wins US$200 Million CDMA Infrastructure Contract from Mirror SA
In what may be one of the largest wireless local loop deployment in South America, LM Ericsson Telefon AB has won a US$200 million CDMA contract from Mirror SA. The CDMA contract is aimed at helping Mirror SA fulfill its commitments to the Brazilian telecommunications industry in Brazil. Deployment for the new network will begin immediately, with the first services to be operational by December.
EUROPE
Madge Networks Acquires Olicom’s Token Ring Applications for US$15 Million
Madge Networks has acquired Olicom’s token ring applications for US$15 million in cash as well as further royalties to be paid over a three year period, depending on the sales development in Madge’s total token ring businesses. As part of the agreement Madge will also purchase certain token ring inventories from Olicom over the coming quarters. In addition, Olicom has been in negotiations with other companies to sell of their other activities and has asked Copenhagen Stock Exchange that its first half report be delayed until the end of September.
Nokia to Expand Tele Danmark’s GSM Network
Nokia Corp. has won a contract to expand Tele Danmark’s GSM network for an undisclosed sum. Under the terms of the agreement, the company will provide GSM 900 and GSM 1800 equipment, the Nokia NMS 2000 network management system as well as high-speed circuit switched data or HSCSD solution for fast data transmission. Nokia has been a regular supplier to Tele Danmark in fixed telephony networks but this is the first Tele Danmark GSM order for Nokia in Denmark.
Nokia Telecommunications to Change Name to Nokia Networks
As the telecommunications industry continues to shift towards the increasing importance of applications, service integration and IP networking, Nokia Corp. will change the name of its Nokia Telecommunications unit to Nokia Networks with effect from October 1. With the change in name, the company will also create a new division called Customer Operations.
Cable & Wireless Wins Spanish Telephone Licenses and Will Invest $120 Million to Upgrade Existing Networks in Spain
Cable & Wireless PLC has been awarded licenses to offer telephone services in Spain from the regulator, the CMT. During the next three years, C&W plans to invest US$120 million to offer future clients integrated voice, data and Internet services at superior discounts to those of its competitors.
Government May Launch Next Offering of Sonera Oyj
The government may launch its next offering of Sonera Oyj shares as early as today, possibly emerging from this morning’s session of the cabinet’s economic affairs committee. At a current market price of about 23 eur a shares, the Finnish state would raise about 10 billion fmk from a sale to institutional and retail investors of a further 10 percent of Sonera, compared with 7 billion fmk for 22 percent in last autumn’s initial public offering. The difference is due to the steady increase in Sonera’s share price since the beginning of the year, and the likelihood of the sale is increased by the need for the government to raise at least 6 billion fmk in privatization receipts this year in line with the budget. Arrangements for the next round of privatization are expected to be lead by Goldman Sachs.
INDIA
ICO Global's Bankruptcy Move May Not Affect VSNL's Foreign Interests
The Videsh Sanchar Nigam Ltd. does not expect its seven per cent equity in the satellite communication company ICO Global to take a beating due to the bankruptcy protection sought by the latter in the US. VSNL chairman and managing director Amitabh Kumar says that there would not be any negative impact on the VSNL commitment of $150 million in the global consortium. VSNL is the third largest investor in the ICO project, with Inmarsat and MCN China holding 10.2 per cent and 7.2 percent, respectively, in addition, VSNL also has a 2.02 percent investment in Inmarsat. VSNL has additional exposure in the form of a satellite access node (SAN) at Chattarpur near Delhi, with infrastructure facilities costing close to INR 200 million. The company's other interests in the satellite telephone business include an INR 500 million investment in a gateway for the Iridium system. The VSNL board has also approved an investment of nearly INR 2150 million in the Subhash Agrani satellite communication project, which is promoted by Chnadra. VSNL will operate and maintain a gateway for the Agrani system. The company also plans to set up a gateway for the Globalstar project.
INTERNET/E-COMMERCE
AT&T Wins International Networking Services Contract from Net2Phone
AT&T has won a contract to provide international networking services to Net2Phone Inc., enabling the company to expand its Internet-based calling services to 17 countries. The five-year contract is expected to generate more than $100 million in revenue, and covers countries in Asia, Europe, and Africa. A dozen other countries will be considered for later expansion under the agreement.
MatrixOne Wins $50 Million E-Commerce Contract from Allied Signal
MatrixOne Inc. has won a $50 million contract from AlliedSignal to develop an electronic commerce system for the conglomerate’s worldwide aerospace and automotive product operations. Under the term of the contract, the company will provide AlliedSignal with product development, management, and business information applications. MatrixOne said its work for AlliedSignal will provide a network linking all phases of operations from product design to sales and distribution. AlliedSignal is currently in the process of merging with Honeywell Inc.
IBM Canada to Deploy Bell Nexxia’s IP/VPN Enterprise Service to Manage Network Operations
Only nine months after the company came onto the Canadian telecommunications scene, Bell Nexxia has won a contract to provide IBM Canada with their new IP/VPN enterprise service. IBM plans to use the new to securely share critical information between key customer locations and IBM’s own network management center. The Nexxia.IP VPN service enterprise will enable IBM to rapidly bring new customers on board and to react to changing needs with high level of security, simplicity and speed. The Nexxia.IP VPN service Enterprise was jointly developed by Bell Nexxia and Cisco Systems, and uses standards-based Multi-Protocol Label Switching (MPLS) enhancements that leverage the Border Gateway Protocol to reduce costs by enabling Bell Nexxia’s shared IP infrastructure to deliver private network solutions with established QoS priorities. IBM will connect to Bell Nexxia’s core IP network backbone, enabling unlimited bandwidth on demand.
Ncipher Corp. Secure $8.25 Million in Fifth Round of Financing
Ncipher Corp. has secured $8.25 million in its fifth round of financing from 3I Group PLC, Bank Atlantic, Prelude Trust PLC, and Viventures. NCipher produces hardware-based high-speed encryption and security devices for electronic commerce. The new funds will be used to expand global sales and marketing and new product research and development.
JAPAN
Cable & Wireless IDC to Double Capacity of Internet Service to 400 Mbps
Responding to a growing increase in international Internet traffic, Cable & Wireless IDC is taking steps to double the capacity of its Internet service to the US to 400 Mbps. Currently, the company has a 30 percent stake of Japan’s international Internet communications market, 20 percent of the international switch voice market and a 25 percent share of the leased line market. The company is talks with two domestic carriers, DDI Corp., a long-distance carrier affiliate of Kyocera Corp.
Headlines - August 31, 1999
TOP STORIES
CHINA
EUROPE
INDIA
INTERNET/E-COMMERCE
MERGERS/ACQUISITIONS
TOP STORIES
Bell South Mobility and Lucent Technologies Sign three-year, $180 Million Wireless Network Expansion Contract
BellSouth Mobility and Lucent Technologies have signed a three-year, $180 million contract for the expansion of BellSouth’s wireless network in Georgia and South Florida. Under the terms of the agreement, Lucent will be preferred vendor for all of BellSouth’s wireless equipment, software and service needs, in both digital and analog technology formats, for BellSouth Mobility’s territories in Georgia and South Florida.
CHINA
Ericsson Wins US$15 Million GSM Expansion Contract from China Unicom
LM Ericsson Telefon AB has won a US$15 million contract to expand China Unicom’s GSM network in China’s Jilin province. The work will be carried out by Ericsson joint venture Beijing Ericsson Mobile Communications Ltd. During 1999 alone, the company has signed over 120 worth of wireline contracts with China Unicom.
EUROPE
Ericsson to Sell Real Estate Holdings and Refocus on Core Wireless Business
Ericsson has decided to sell the group’s real-estate holdings in an effort to focus on core business and use its capital more efficiently. At the end of June, the book value of the properties was more than US$900 million, and the company estimates that the market value will be between US$1.1 billion and US$1.2 billion. Included in the sale, are most of the company’s property assets in both Sweden and abroad. The company plans to continue renting the properties for its operations once sold. Also, the divestment is in line with the company’s strategy of moving out of its noncore operations.
Nokia Wins EU$170 Million GSM Network Upgrade from Omnitel
Omnitel SpA and Nokia Corp. have singed an EU$170 million contract to improve the Omnitel mobile telecommunications network. Under the terms of the contract, the company will provide its new MSCI communications centers, which are used for value added services, and for the Nokia NMS 5000 management system.
Deutsche Bank and NetCologne Plan Joint Bid for Deutsche Telekom’s Cable Television Networks
Deutsche Bank AG plans to join forces with Germany’s largest local telephone operator NetCologne in a bid to compete against Deutsche Telekom AG via television cable network as well as via fixed line networks. The bank’s subsidiary DB Investor plans initially to acquire completely Deutsche Telekom’s TV cable network in North Rhein Westphailia State. And its second step its to acquire a minority stake in NetCologne, a deal which could enable DB Investor to reach 4 million clients.
Compaq Wins US$75 Million Computer Supply Contract from Cable & Wireless
Compaq Computer and Cable & Wireless PLC have signed a US$75 million, three-year contract for Compaq to supply Cable & Wireless with Deskpro desktop and Armada notebook PCs for its global operation. Compaq international systems reseller International Computer Group will handle the configuration, service and support. The agreement will deliver what Cable & Wireless sees as a significant cost savings through global standardization of its desktop platforms, improved management reporting, and complete visibility of worldwide purchasing. Availability of the agreement to C&W’s business units will take place in three phases, with the full rollout expected to be complete within three months, beginning with offices located in the US and the UK.
KPN Forecasts Higher Fiscal Year Growth and Seeks Separate Listing for Mobile Unit
In the face of a less than desirable first half, with profit falling 9.3 percent, KPN NV expects a positive growth surge in Internet and mobile operations for the full year. During the first half, net earnings fell to 918 nfl or 1.93 nfl a share from 1.012 billion or 2.14 nfl a share in the same period of 1998. The company expects a slight increase in full-year profit to 1.7 billion nfl, up from an earlier forecast for flat profit of 1.6 billion compared with 1998. One-time gains of 171 million nfl from the sale of parts of the Unisource network and some parts of Eircom, the Irish telecommunications company in which KPN holds a 21 percent stake, also helped the company boost its forecast for full-year profit. Overall first-half sales rose 7.2 percent rose to 8.849 billion nfl, led by mobile telephony operations, which saw sales rise 28.7 percent to 1.672 billion nfl. The number of mobile subscriptions rose 30 percent to 2.8 million, maintaining KPN’s strong position with 57 percent of the Dutch market. To finance further growth, KPN said it would consider a separate stock listing for its mobile unit in order to finance further growth. KPN’s telecommerce unit posted a 34 percent rise in sales to 639 million nfl, led by Internet related services, and Internet subscription rose to about 400,000, with about 130,000 users on their Het Net service.
INDIA
ICO Global's Bankruptcy Move May Not Affect VSNL's Foreign Interests
The Videsh Sanchar Nigam Ltd. does not expect its seven per cent equity in the satellite communication company ICO Global to take a beating due to the bankruptcy protection sought by the latter in the US. VSNL chairman and managing director Amitabh Kumar says that there would not be any negative impact on the VSNL commitment of US$150 million in the global consortium. VSNL is the third largest investor in the ICO project, with Inmarsat and MCN China holding 10.2 per cent and 7.2 percent, respectively, in addition, VSNL also has a 2.02 percent investment in Inmarsat. VSNL has additional exposure in the form of a satellite access node at Chattarpur near Delhi, with infrastructure facilities costing close to INR 200 million. The company's other interests in the satellite telephone business include a INR 500 million investment in a gateway for the Iridium system. The VSNL board has also approved an investment of nearly INR 2150 million in the Subhash Chnadra-promoted Agrani satellite communication project, VSNL will operate and maintain a gateway for the Agrani system. The company also plans to set up a gateway for the Globalstar project.
INTERNET/E-COMMERCE
City Reach Ltd. Secures $20 Million in Funding from Battery Ventures
Battery Ventures, an international venture capital firm that focuses exclusively on the communications, software, and e-commerce markets, announced today that it invested the first portion of a $20 million commitment to City Reach, Ltd. M/C Venture Partners join Battery in the investment, one of the most active private equity investors in the media and telecommunications industries. With this investment, City Reach is positioned to take the lead in the market for global, carrier-neutral collocation facilities serving telecommunications carriers as well as Internet service and content providers. The $20 million commitment allows City Reach to continue its first-phase rollout of highly secure, carrier-neutral, collocation facilities across Europe, beginning with a 60,000 square foot facility scheduled to open in Amsterdam in late-1999.
MERGERS/ACQUISITIONS
Tellabs Completes Acquisition of Netcore Systems
In a move to help service providers build next-generation networks, Tellabs has completed its $575 million acquisition of NetCore Systems Inc., which will form the core of Tellabs’ new internetworking systems division, based in Wilmington, Mass. NetCore’s Everest Integrated Switch combines IP routing and ATM switching into a single multi-layer device. This switch and router reduces network cost and complexity and will enable carriers to provide Internet, virtual private network and other business class services on a single platform, complementing Tellabs’ line of optical networking, managed access and transport systems to accelerate delivery of a broad range of multiservice IP and ATM-based solutions.
Headlines - August 30, 1999
TOP STORIES
EUROPE
FIBER OPTICS
INDIA
MERGERS/ACQUISITIONS
WIRELESS
TOP STORIES
Law Enforcement Enters Digital Era with FCC’s Approval of New Wiretap Standards
The FCC on Friday approved six new industry standards that will enable law enforcement investigations to enter the 21st century world of digital communications. On Friday, the FCC’s approved six new standards requiring telecommunications providers to meet six new surveillance capabilities sought by the Justice Department. Companies have to meet an interim industry by June 2000. Under the terms of the new standards, carriers, including wireline, cellular and broadband personal communications services, to provide law enforcement officials bearing court orders with a variety of wiretap capabilities. The new standards will enable investigators to identify the location from which a call is placed; tap conference calls; require carriers to provide access to packet mode communications; allow officials to know when a suspect uses call-waiting and similar features; and gather information required to grant access to information needed to correlate call identity with content. With their approval of these standards, the agency wanted more information on wiretaps of packet mode communications, used on the Internet and increasingly for voice communications. The FCC asked the Internet industry to develop a solution by September 2000. Although the cellular industry praised the new standards, Jim Dempsey, a representative of the Center for Democracy and Technology, argues that the FCC has ruled against privacy and in favor of advanced law enforcement surveillance.
AT&T to Meet Goals for 1999 and will Launch Low Rate Calling Plan
In the face of concerns that declining long-distance prices will cut into their profits, AT&T is expected to report that it has met its expectations for 1999 for revenue growth and earnings while introducing its own reduced rate calling plan. The long-distance giant is also expected to launch a nickel per minute calling plan similar to MCI WorldCom’s plan announced earlier this month. Their plan charges callers five cents a minute all weekend and from 7 p.m. to 7 a.m. five days a week for a $1.95 monthly fee. Since MCI WorldCom launched this new pricing structure this month, pressure has been mounting against AT&T as consumers compare both plans, while Wall Street analysts are worried about eroding prices and their impact on AT&T’s ambitious growth plans. Sprint also has a five-cent nighttime calling plan. One of AT&T’s calling plans offer consumers a 10 cents a minute, though that rate applies to all hours of the day.
Viatel Acquires Destia Communications for US$608.4 Million in Stock
Viatel Inc will acquire outstanding shares of Destia for $608.4 million in stock. The combined company would be capitalised at $2 billion, have a going rate of $576 million sales per annum. With the acquisition, Viatel will gain 22 European-based sales offices, with 500,000 customers in Western Europe. The new company would be fully licensed to provide services in 10 European countries and to own and operate infrastructure in seven of them. They would also have interconnection agreements with incumbents in the 4 major European countries plus five others, covering 70 percent of the European population. The new company's network would include the Circe network as below, 29 Nortel DMS switches with redundant gateways in New York and London, 200 POPs in Europe plus North America and ownership interests in substantial capacity across the US, Canada and the Atlantic Ocean. Under the terms of the agreement, Destia shareholders will receive 0.445 shares of Viatel stock for each share of Destia common stock, or $17.382813 a share based on Viatel’s closing price on Friday, August 27. Viatel would also assume about $390 million in Destia debt.
EUROPE
Network Segments of SEA-ME-WE- 3 Become Available
France Telecom, an initiator and principal sponsor of SEA-ME-WE 3, announced the commercial availability of parts of the network covering segments linking Singapore to southern China, Australia and Europe, transiting via India and the Middle East, with segments extending to Japan and Shanghai. It is expected that these segments will be available for service in September and November 1999 respectively. It was launched in 1997 by a consortium of 92 international telecommunications companies. France Telecom is co-chair of the Managing Committee with China Telecom, together responsible for project policy and strategic decisions. Four France Telecom cable laying vessels, including the Fresnel, Vercors, Raymond Croze and Leon Thevenin, laid nearly 25,000 km of cable, representing over 60 percent of the Sea-Me-We 3 system.
Mannesmann Issues 2 Billion Eur Eurobond
Mannesmann AG has issued a 5-year Eurobond with a volume of 2 billion via its Netherlands unit Mannesmann Finance NV. The proceeds from the issue are intended to serve the refinancing of outstanding sort term debt following the acquisition of majority stakes in Italian telecommunications providers Omnitel and Infostrada. The bond carries an unconditional and irrevocable guarantee by Mannesmann AG and coupon of 4.875 percent with a fixed reoffer price of 99.675. The issue will be listed for trading in Dusseldorf and Frankfurt and do Deutsche Bank AG, Dresdner Bank AG and Warburg Dillon Read lead being launched by a banking syndicate.
News Corp. Considers Bid for Deutsche Telekom’s Cable Television Networks
Furthering in the expansion of his already dominant empire, Rupert Murdoch’s News Corp. has sent a letter expressing interest in bidding for the cable television systems of Germany’s Deutsche Telekom. Telekom currently holds stakes in nine German cable television ventures and bidding has come from a variety of parties. An acquisition of these networks would fit with the company’s aspirations to expand their European presence. The company currently holds a majority stake in German cable channel TM3 and 49.9 percent of Vox, another cable channel in Germany.
Vodafone AirTouch Unit Increases Stake in Italy’s Omnitel to 21.6 Percent
Vodafone AirTouch PLC has increased its ownership in Omnitel Italia SpA to about 21.6 percent from 17.8 percent through its wholly owned subsidiary AirTouch BV exercising an option. The option was held under a previously existing agreement with other indirect OPI shareholders. Financial terms of the deal were not disclosed.
Mannesmann Acquires Indirect Shares in Omnitel
Mannesmann AG has acquired indirect interests in the Italian mobile operator Omnitel Pronto SpA from various minority shareholders by executing option rights negotiated in 1996. The latest transaction increases Mannesmann’s shares in Omnitel to 55 percent.
FIBER OPTICS
Touch America continues to fill 24,000 Km US Network by Linking to NCE in Denver
New Century Energies, the holding company for Public Service Co. of Colorado, and Touch America, an independent long-distance telecommunications carrier, will invest $21 million in a new joint venture. Under the terms of the new venture, the two carriers will combine the resources of the NCE subsidiary known as NCE Communications which has a 368 km fiber network connecting Denver with Touch America's existing 24,000 km network. Shawn Hill, New Century Energies director of information technology, noted that the company's network already ran under the streets of downtown Denver, and included links throughout the Denver Tech Center, Golden, and other key areas within metropolitan Denver. He said NCE Communications would now be able to offer its customers up to 10 Gbps of unimpeded capacity. Touch America President Mike Meldahl said the agreement represented another step in filling Touch America's long-haul fiber network.
INDIA
IMPUA Accuses Telecom Regulatory Authority for Siding with the Operators
In a scathing attack on the Telecom Regulatory Authority of accused the regulator of conniving with the cellular operators against the interests of the consumers. In a harshly worded missive to the regulator, the Indian Mobile Phone users Association (IMPUA) said that the recent decision of TRAI nullifying the Calcutta cell phone operators Usha Martin's offer of free incoming call facility to its users was 'totally against the interest of consumers'. The Indian telecom regulator had, on August 20, struck down Usha Martin's 20 struck down Usha Martin's offer to free incoming calls on cell phones of tariff. The TRAI, however, struck off the offer on the ground that it was not informed of the move well in advance.
Attorney General and the Department of Telecommunications Discuss Problems in Telecommunications Sector
The Attorney General Soli Sorabjee may not have heard the last on the India’s telecommunications sector's tangled issues yet. On Saturday, Sorabjee met with top officials of the Department of Telecommunications (DoT) to resolve the contentious issues, which require immediate solutions. Topping the list of issues which require the AG's opinion include what should be done to resolve the problem of private operators who have failed to submit the undertaking that they would accept the New Telecom Policy (NTP99) subject to its clearance by the next council of ministers and the Lok Sabha. This was an undertaking, which was agreed upon by operators in the Delhi High Court in response to public interest litigation filed there by the Delhi Science Forum. So far, only Essar has submitted its undertaking to the government for its basic service circle of Punjab.
Lockheed Martin Affiliate ACE International Enters Partnership in Shyam Satellite Telephone Venture
ACE International Ltd., the company co-promoted by US aerospace major Lockheed Martin, has replaced PT Asia Cellular Satellite Ltd. of Indonesia (PT Aces) as the foreign joint venture partner in the Shyam group-promoted satellite telephony venture, Shyam ACEs India Ltd. This will be Lockheed Martin’s second association venture in India for the global mobile personal comminations systems (GMPCS) project. US major has a 13 percent stake in Subash Chandra-promoted ASC Enterprises Ltd., which is also implementing a GMPCS project. The replacement of the foreign partner in Shyam Aces follows Lockheed Martin Global Telecommunications (LMGT) picking up a 30 percent stake in PT Aces, which was jointly promoted by Philippines Long Distance Telecommunications (PLDT), Jasmine Telecommunications of Thailand and Pacific Satellite Ltd. of Indonesia. Following the holding change, PT Aces has been converted into Aces Intl Ltd. and is registered in now Bermuda.
Dishnet Seeks Foreign Ally, Loans form Financial Institutions
Dishnet, an Internet service Provider, is negotiating with few foreign companies for a 49 per cent stake in the company. The company has kept its options open for either a single foreign partner or multiple partners is also seeking loans form financial institutions, and is negotiating with Industrial Development Bank of India and Unit Trust of India. Meanwhile, Dishnet has set the date of September 13 for starting its Internet operations in Mumbai and New Delhi, simultaneously. It has already invested INR 600 million in setting up the infrastructure in these two metros. Dishnet, which has a nation-wide license for Internet operations, has earmarked to total investment of INR 5 billion in the next five years. The company expects to break even by March 2001, by which time it hopes to achieve the critical subscriber mass of 5,00,000. Dishnet, which started its operations in Chennai and Pune in April 1999, and already has a total subscriber base of 15,000. The company is also planning to set up its own 310 Mbps gateway, which it hopes to install by March next year.
Modi Telstra Lauches New Tariff Plan
Modi Telstra, the cellular service operator in Calcutta, joined the free-incoming calls club, by launching its new tariff plan. Modi Telstra's rival Command had declared free incoming calls on August 15. Offers of incoming calls form both the operators will be effective till the calling party pays (CPP) regime takes off on November 1. Till then, it is a bonanza for the customers.
MERGERS/ACQUISITIONS
Netrix Corp. and OpenRoute Networks to Merge in Stock Swap
Netrix, a provider of voice and data networking products, will merge with OpenRoute Networks in a deal valued at $114 million in stock. Under the terms of the agreement, Netrix will exchange each share of its common stock for one share of OpenRoute common stock. The merger of Netrix, which is based in Herndon, VA and OpenRoute of Westboro, MA, should be finalized by the end of this year. Netrix said its current voice telephony Internet products will be integrated with OpenRoute’s security products to offer virtual private voice and data networks.
Sun Microsystems to Acquire Star Division Corp.
Sun Mircosystems will acquire the closely held Star Division Corp., a manufacturer of office software products, for an undisclosed amount. Star Division, a former German company, which has its headquarters in Fremont, CA, makes a suite of word processing, spreadsheet and presentation software called Star Office that is popular with users of the free Linux operating system. Sun plans to make the Star Office applications available over the Internet and may give away the program’s underlying source code free as well.
WIRELESS
AT&T to Divides Wireless Equipment Vendor Contracts
In the effort to improves its wireless network, AT&T Corp. has decided to divide its equipment vendor contracts between Lucent Technologies, Nortel Networks, and Ericsson. The carrier looks at this three-pronged strategy as a means to increase capacity and improve the reliability of its wireless network. Although financial details of the deal has not been disclosed, AT&T executives say the overall value of the deal is more attractive than their deal with Lcuent Technologies. The carrier hopes to save about $900 million during the next four years, in part from its vendor discounts. Their wireless network has been marred with problems with dropped calls in the crucial New York market, which the carrier blamed on the amount of customers outpacing what it was prepared to handle. Ericsson, a major provider of wireless equipment for the AT&T network, admitted that it was partly to blame for the bottleneck problems, since it was not able to ship the equipment fast enough to meet the capacity demands. With that in mind, AT&T will replace Ericsson’s with Lucent products. Under the terms of the new accord, Lucent will provide equipment to AT&T Northeastern and Midwest US markets, Nortel will focus on the West Coast and Ericsson will supply equipment to the Southeastern and South Central US region.
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