Intel Corp said yesterday that it will take a $200m stake in Williams Communications Inc, the carrier subsidiary of Williams Co. The investment will take place simultaneously with Williams Communications’ planned IPO announced in April. Williams expects to raise $750m with the IPO but will also receive an extra $500m from SBC Communications Inc for a 10% stake as well as the $200m from Intel.
Intel said it was making the investment after deciding to turn to Williams to provide the network access for its planned Internet Data Services (IDS) business announced in April. The IDS unit is set to build and operate a number of large-scale data centers to offer web-based hosting and applications. As part of the deal, Williams will provide the network transport over its ATM backbone for the planned centers in the US. Under the terms of the deal, Williams will be the preferred supplier, carrying at least 50% of the traffic between the centers. Intel also said that it will use IP-based services from Williams Communications’ Multi-Service Broadband Network offerings, but that the details of the multi- carrier agreement have yet to be completed. No value or duration for the deal was given.
