RealTime IT News

NorthPoint Sells Out Of European Venture

NorthPoint Communications sold its interest in a European experiment to venture partner VersaTel Friday, freeing up much-needed capital and netting $6.5 million for the coffers.

Dutch-based VersaTel took complete control of VersaPoint after buying NorthPoint's 50 percent stake, freeing the troubled American competitive local exchange carrier from approximately $23.2 million in future deployment commitments.

The joint venture, dubbed VersaPoint at the company launch in March, was to marry VersaTel's telecommunications presence in the European markets with NorthPoint's experience deploying high-speed digital subscriber line service.

Although VersaPoint had big potential in a European market every bit as hungry for high-speed Internet services as their American counterparts, deployment only recently started in countries like the United Kingdom, France and Germany.

Michael Malaga, NorthPoint founder and chairman of the board, said the agreement frees his company to shore up operations within the U.S.

"Under our current circumstances, we do not have the resources to support this venture," Malaga said. "This action will allow us to focus all of our attention and energies on streamlining our existing business."

Today's announcement signals the competitive local exchange carrier's departure from a venture that seemed a smart bet in the rosy glow of DSL provisioning in early 2000. Back in January, the promise of broadband to the masses had not been caught yet by the realities of the cost to provide those services.

But deregulation hasn't reached the level of commitment across the pond as it has in America. Only recently, in October, did VersaPoint gain licensing rights to France Telecom's and British Telecom's unbundled loop in France and the United Kingdom, respectively.

Since then NorthPoint has come perilously close to dissolution, trying to pay for network costs after failing to secure revenues from broadband Internet service providers.

Its ISP woes prompted Verizon Communications to back out of a $800 million merger deal earlier this month. NorthPoint has since filed a $1 billion lawsuit against the incumbent local exchange carrier.

Investors approved of today's news in the form of a 20 percent jump in pre-opening trading.