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Bell Atlantic to Buy Fiber, Take a Stake in Metromedia

Bell Atlantic Thursday bought $550 million in fiber optic network infrastructure from Metromedia Fiber Network, Inc. and invested another $1.7 billion to take up to a 19 percent stake in the company.

Under the terms of the first deal, Metromedia (MFNX) will offer dark fiber infrastructure over a 20-year period. Bell Atlantic will also receive low-cost access to Metromedia's network of 50 metropolitan fiber optic infrastructures in the U.S. and abroad.

Bell Atlantic (BEL) purchased a 9.9 percent equity share in Metromedia for $700 million, buying newly issued shares priced at $28 each. The telecom will also buy $975 million in debt securities which can also be converted into common stock at a price of $34 per share, allowing Bell Atlantic's to increase its equity to about 19 percent.

Bell Atlantic expects the deal to build up its data services, while Metromedia will use the funds to expand its infrastructure both domestically and internationally.

"This relationship extends our data network and advances our strategy to be a nationwide and global provider of leading-edge communications services," said Larry Babbio, Bell Atlantic's president and chief operating officer. "It also complements the reach of the GTE national backbone network and our new wireless venture with Vodafone."

Metromedia's AboveNet acquisition also played into the Bell Atlantic deal, adding Internet connectivity services and peering relationships.

Earlier this week, Metromedia announced plans to roll out additional network coverage to 25 U.S. and European cities, and intends to enter a total of 50 markets. The company also inked a $300 million deal with WinStar to sell capacity on Metromedia's domestic and European dark fiber network.

Bell Atlantic Wednesday released a high-speed Internet access package created in conjuction with modem company 3Com Corp. The Infospeed service will be available in 13 metropolitan markets on the East Coast of the U.S.