An interview with Larry Olsen–360networks using IPO proceeds to finish network builds in North America, Europe

Armed with $745 million from its initial public offering, 360networks Inis ramping up an ambitious construction program that will see 90,000 route km of fibre optics installed by mid-2001 throughout North America and Europe, as well as undersea. The Canadian leg of the network - some 2050 route km - should be finished by the end of the year. By early next year, it will have doubled the reach of its fibre across North America to more than 38,400 route km. Its Hibernia project, now named 360Atlantic, should be rolling into Europe soon. In an interview with Network Letter, 360network's vice chair/CFO Larry Olsen discussed the company's evolution from being a small telecom division of Ledcor Industries Ltd, to one of the world's largest builders of backbone fibre. In its last fiscal year, 360networks earned nearly US$400 million in revenues. Earlier this year, the Vancouver company change its name from Worldwide Fiber to 360networks. "We were concerned that in the marketplace the Worldwide Fiber term really connoted too much of the construction and network side," says Olsen, "rather than the delivery of telecommunications services, which is where we're heading." Despite the name change, worldwide is exactly where the company's network expansion is headed. North America The North American network is close to completion, with 38,400 kilometers of fibre being laid. At the end of May, 360networks signed an agreement to provide fibre and capacity to GT Group Telecom Inc. Under the pact, Group Telecom will use 7000-km of fibre optics connecting the pacific to the Maritimes. The cities affected are Seattle, Victoria, Vancouver, Kamloops, Edmonton, Calgary, Regina, Winnipeg, Toronto, Ottawa, Montreal, Quebec City and Halifax. The telecom company will also have access to 360network's backbone connecting Vancouver to Albany NY, Boston, Buffalo, Chicago, Denver, Detroit, New York City, Sacramento, and Seattle, as well as Toronto and Montreal. Last December, the company secured a US$10-million investment from The Sprout Group, the venture capital division of Donaldson, Lufkin & Jenrette of New York. The money was used to complete its Hibernia transatlantic project. "(360Atlantic) is on budget and on schedule," Olsen reports. "We've got a lot of work in the cable landing stations. Most of the facilities themselves are now built. We're putting in the 9000-watt power banks, we're putting in the air conditionings, the power generators, the backup equipment. The equipment is currently just starting to be loaded on to some of the vessels." Olsen expects cable will be laid this summer and fall, with tests beginning in late summer and early fall. Service should be ready by the first quarter of 2001. Europe Coincident with the 360Atlantic build, the firm is looking to expand its presence throughout continental Europe. Last week it signed an agreement with Carrier1 International SA of Zurich. The pact will see 360networks get 3000 km of diversely routed dark fibre on the Swiss firm's German network. It will connect 15 cities, including Munich, Hamburg and Frankfurt. Carrier1 will also provide access to dark fibre on its city rings in Amsterdam and Paris. In return, it will receive access to the Canadian company's network between London and Liverpool, which also links Birmingham, Bristol, Cambridge, Manchester, Nottingham and Sheffield. 360networks is planning a European build that will cover about 17,000 route kilometres. The network will connect 35 major cities in 11 nations, including Berlin, Madrid, Paris and Stockholm. The company expects parts of the network will be ready for commercial use by the third quarter of this year. One year later, the entire network should be in use. South America The next target is South America. 360networks is in the final stages of taking over GlobeNet Communications Group Ltd, a purchase it began in mid March. That takeover gives the Vancouver company cable from New York, Florida and Bermuda to Rio de Janeiro and Fortaleza, Brazil and Buenos Aires, Argentina. Olsen says one of the first terabit cables is currently being loaded on a ship in France and should be in Bermuda by the end of June or early July. 360networks will then begin laying the cable from the Caribbean to Fortaleza. "I am quite confident we will have a terrestrial network in place fairly quickly," he predicts, "both to handle the back haul traffic through South America and as a redundancy link to the marine cable." One of the advantages of buying a firm like GlobeNet is bringing its employees on stream. "The network's part of it but you have to have a team who can execute and deliver the services," Olsen says. He speaks highly of Jorge Escalona, the CEO of GlobeNet, who will become president of 360network's South American operations. Asia The company has focused primarily on the western hemisphere, but the firm is making fledgling steps into the Asian market. It announced an agreement with iAdvantage to develop co-location facilities. Olsen says 360networks is currently studying various alternatives for its entry to the Asian market. "That's a major capital expenditure," he says. "We're going to wait until we have the right partners terrestrially and the right cable landing spots and the right back hauls in place, but that's something you can expect some activity from us on, within the next six months." The company sells its services to various customers. "First would be the large carriers, who are customer heavy and network slim," Olsen announces, "so we'll be marketing either cable head to cable head or gateway to gateway or point to point to them." From carrier to service provider 360networks already has deals in place with major carriers in North America, Europe, Asia and South America. "Beyond that we would be looking to be an enabler of a lot of the new generation of carriers, the ISPs, the ASPs and some of the storage service providers." Currently the company has agreements with PSInet, Shaw, Group Telecom, Qwest and others. Olsen anticipates moving toward pacts with smaller carriers and regional CLECs that could plug into the firm's LD network and city rings. "The development of networks is a little more than half the business but by next year telecommunications services overhaul that pretty substantially. And by 2002, 80 per cent of our revenue and EBITDA would come from telecommunications services and wave lengths and leases and co-locations rather than network development."

An interview with Larry Olsen–360networks using IPO proceeds to finish network builds in North America, Europe

News | 06/05/2000 4:00 am EDT

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