Colt in network link with rival
Your support helps us to tell the story
As your White House correspondent, I ask the tough questions and seek the answers that matter.
Your support enables me to be in the room, pressing for transparency and accountability. Without your contributions, we wouldn't have the resources to challenge those in power.
Your donation makes it possible for us to keep doing this important work, keeping you informed every step of the way to the November election
Andrew Feinberg
White House Correspondent
COLT TELECOM, the fast-growing long-distance telecoms operator, is linking up with its rival Level 3 to share the costs of building out their pan-European networks.
Colt said it had agreed to share the costs of building Level 3 International's European network in exchange for Level 3's help in building Colt's German network, which will cover 2,600km. Level 3's network, linking Paris, Frankfurt, Amsterdam, Brussels and London, will cover 2,800km. The agreement is likely to raise speculation that the two companies might consider closer co-operation, such as a merger.
Level 3 International is a division of Level 3 Communications, based in Omaha, Nebraska, which is building an international fibre-optic phone and data network.
Both companies are unprofitable as they spend to build advanced networks able to carry data and voice traffic for businesses. "It makes enormous commercial sense for a lot of the cost to be shared," said Peter Roe, an analyst at Paribas Capital Markets, who rates Colt a "buy". But he added: "Just because two people are dancing, doesn't mean they're going to get married, but it will be an intriguing prospect for the market."
Shares in Colt, which is based in London, rose 23p, or 2 per cent, to 1,184p. Level 3 shares rose $1 to $88 on Nasdaq.
Colt, which operates a network in 13 cities in eight European countries, plans to provide a service in at least 24 cities by the end of 2000. The agreement with Level 3 "is a very cost-effective way of meeting our customers' needs," Paul Chisholm, Colt chief executive officer, said in a statement.
While Colt's networks focus on providing service within big cities, Level 3 is working on building a network between cities. It expects to complete its US intercity network during the first quarter of 2001.
Subscribe to Independent Premium to bookmark this article
Want to bookmark your favourite articles and stories to read or reference later? Start your Independent Premium subscription today.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments