Acquisitive high profile US telco Qwest Communications International Inc, has struck again, paying $154.4m in stock and cash for Amsterdam-based business internet service provider EUNet International BV. The move propels the company into Europe, with a direct transcontinental link via capacity on the WorldCom Inc and Cable & Wireless Plc’s trans-Atlantic cable Gemini. Qwest is planning to link up its network to EUNet’s European backbone, which covers 13 major European countries. But Qwest chief executive Joseph Nacchio warned that technical difficulties will prevent the two companies from fully integrating their networks any time soon. In the longer term Qwest is planning to offer full low cost transcontinental Voice- over-IP services to business in around six months, but is going to sell international data services before that. Nacchio says EUNet’s management will remain intact in order to preserve EUNet’s short term revenue growth, which this year is expected to see a 36% rise to $75m, according to the company. Qwest will pay $135.5m in newly issued shares for EUNet, and $4.5m in cash, with Qwest having the option to pay the remaining $14.4m in either cash or shares. It is already in the process of acquiring number five US long distance player LCI International Inc, for $4.4bn in stock. The company has seen rapid growth, since its initial public offering last June the stock has risen 260%, closing yesterday up another $0.875 at $40 exactly. EUNet was formed back in 1982 as an informal collection of internet infrastructure providers who were all members of the European Unix Users Group (EUUG) and became the largest provider of internet backbone services in Europe. Some members decided to break ranks and cash in, such as the UK’s EUNet Ltd which was sold to PSINet Inc for a paltry sum in 1995, and EUNet German which was sold in two chunks to WorldCom Inc’s UUNet Technologies Inc in 1996. Qwest is due to complete its 16,285 fiber optic mile network, serving more than 125 cities in the second quarter of 1999, and it will also gain LCI’s 4,500 mile fiber-optic network when the deal completes. Qwest says it is already getting revenue from the activated 3,600 miles of fiber, and selling wholesale capacity and long haul IP telephony. This acquisition is Qwest’s fourth in eight months. It has already acquired SuperNet, long distance reseller Phoenix Network Inc, and LCI.
