360networks Corporation, a provider of broadband telecommunications in North America, has agreed to sell its Canadian assets, primarily Group Telecom, to Bell Canada for US$205 million in cash. Bell will also purchase selected northern US interconnection assets and related liabilities.
Ã¢â‚¬Å“This is a great transaction for 360networks,Ã¢â‚¬Â said Greg Maffei, Chairman and CEO of 360networks. Ã¢â‚¬Å“Group Telecom has been growing profitability and faster than the market. We remained optimistic about our ability to continue to grow given our people, strong regional assets and focus on data and medium-sized enterprises. We are very disappointed to be exiting Canada, however the opportunity to monetize our tax losses and eliminate our debt was compelling.Ã¢â‚¬Â
Ã¢â‚¬Å“This transaction validates 360networksÃ¢â‚¬â„¢ acquisition and operating strategy,Ã¢â‚¬Â said Wilbur L. Ross, Chairman and CEO of WL Ross & Co., a 360networks investor and Board Member. Ã¢â‚¬Å“GT was a strategic asset that was purchased attractively. The management team improved operations and got the company growing again. Now it is being sold for a big gain in less than eighteen months.Ã¢â‚¬Â
Ã¢â‚¬Å“In our view, the transaction represents a very good outcome for the senior creditors, particularly in light of the challenges in the telecom industry, and evidences management’s hard work to maximize value for 360’s creditors and other stakeholders.” said Susan E. Atkins, Managing Director, JP Morgan Chase. “We intend to recommend this transaction to the senior creditors of 360networks.”
360networks completed the purchase of GT in February 2003. During 2003, GT dramatically improved its operations and raised customer satisfaction reducing its churn, sales allowance and bad debt. GT also refocused its sales efforts on the data markets and medium-sized enterprises and rebuilt its sales funnel which allowed it to grow faster than the wire line market.
360networks has been taking advantage of the turmoil in the telecom market by adding synergistic, cash-flow positive assets at a fraction of their original construction cost and current replacement value. In addition to GT, during 2003, 360networks also acquired DynegyÃ¢â‚¬â„¢s telecom assets and Touch America (formerly Montana Power). These acquisitions have allowed the company to serve its customers better by extending its network reach and product capabilities while lowering costs through higher utilization of network and overhead.
Following the closing of the GT deal, 360networks will focus on its US operations, which include a low-cost, US long-haul network footprint with good metro access and a Western US regional network with unique reach into rural markets. With its debt-free balance sheet, attractive network, and experience in purchasing and improving the operations of distressed telecom assets, 360networks believes it has an opportunity to do more acquisitions.
Ã¢â‚¬Å“Today there are fewer logical consolidation opportunities in Canada, but we do believe there are some interesting opportunities in the US,Ã¢â‚¬Â said Maffei.
360networks and Group Telecom provide telecommunications services in the US and Canada to over 10,000 carrier and commercial customers. We offer a comprehensive range of services from traditional local and long distance voice products to innovative products such as optical transport, wavelengths, Internet transport, Gigabit Ethernet, and optical virtual private networks (OVPNs).
For more information, please visit: www.360.net