Small Telco Draws Big Money
Small Telco Draws Big Money By Bob Starzynski Staff Writer Some of Wall Street's top investors are helping Net2000 Communications land $250 million to make the leap from a small telecommunications business to a full-fledged telephone company that competes with industry giants. To create a formidable presence in the multibillion-dollar competitive local exchange carrier (CLEC) market, Net2000 needs a lot of money. Just
Small Telco Draws Big Money By Bob Starzynski Some of Wall Street's top investors are helping Net2000 Communications land $250 million to make the leap from a small telecommunications business to a full-fledged telephone company that competes with industry giants.
On June 29, e.spire Communications (formerly American Communications Services) of Annapolis Junction, Md., announced it would spend $150 million in the next year to expand its services to Atlanta, Washington, South Florida and San Antonio. "There are a lot of new players in the market," said Cynthia Houlton, an analyst with Utendahl Capital Partners in New York. "Most of these companies aren't trying to cover the whole country. Most of them can't even completely cover a market like New York or Washington." So far Net2000 has had no trouble securing the money it needs to build its network. Venture capital investors for the company include: Mid Atlantic Venture Fund, Vienna, Va.; Blue Water Capital, McLean, Va.; Societe Generale, a French bank with an American venture fund; PNC Equity, Pittsburgh; and the Carlyle Group, a Washington merchant bank. As for the vendor financing, Thomas said Nortel and Lucent are currently bidding each other up and the winner will supply Net2000 with financing and assistance in building out the new network. While Net2000 builds its network in the Northeast, the company will continue to resell services from other telecommunications companies, such as Bell Atlantic. But the company will rely more on its network over the next 18 months. "Our target market is still the same, small and mostly midsized companies," Thomas said. "And we're focusing heavily on data communications services." Large telecom companies do not always take kindly to sales agents becoming competitors, but Thomas calls his situation a "very amicable departure from Bell Atlantic." "We look forward to continuing our relationship with Net2000 through our wholesale division," Mark Kutner, president of Bell Atlantic General Business Services, said in a prepared statement. In other words, Net2000 will buy capacity from the incumbent Bell company. |
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