Carrier 1: Behind the Scenes in Europe
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The venture capital firm Benchmark Capital has had many homeruns, such as Ariba, eBay and Red Hat. Now, the firm has setup a $500 million fund to target Europe. In a way, the Net possibilities are similar to what existed in the US several years ago. In fact, European IPOs have done quite well, as investors want to get the next Yahoo! or eBay.
But before there can be a thriving Net market in Europe, there must be a strong infrastructure. One of the leaders is Carrier 1 International (CONE) . The company went public in late February (led by Morgan Stanley). However, unlike other IPOs, this one did not skyrocket. The high was $35 and the stock is now trading at $27.
In essence, the company is a provider of voice, Net and bandwidth services. Carrier 1, though, does not sell services to consumers; rather, it sells them to telecom providers (such as Internet service providers). In fact, telecom providers like purchasing services from a company such as Carrier 1 because it is not a direct competitor.
Carrier 1 is not a reseller of network bandwidth; rather, the company is building-out its own fiber optic network. By owning the network, the company has more control over quality, service offerings and cost.
What is amazing is that the company is only a few years old. Then again, Carrier 1 has a top management team, with many years experience in the European telecom market.
Inevitably, the need for bandwidth will explode in Europe. There was about 10% penetration of Web users in 1998. This is expected to surge to 45% in 2003. This means Europe will demand sophisticated networks to carry the data. And Carrier 1 will be there to reap the benefits.
Carrier 1, a good investment? Discuss it here
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