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@Home Reconsiders Plan to Outsource to AT&T

Leading cable broadband provider Excite@Home Friday pulled back from an April decision to outsource the operations and engineering of its network to majority shareholder AT&T.

The deal was part of a plan engineered by former @Home Chairman and Chief Executive Officer George Bell to restore the company to financial health.

The plan consisted of four parts: cutting operational costs and making layoffs, restructuring the company's deal with AT&T, obtaining some third party funding, and selling off some of the company's media properties.

Part of that plan was fulfilled Wednesday, when the company scaled back its European media operations.

The AT&T portion of the plan consisted of two parts: selling the company's Indefeasible Rights of Use (IRU) of its network to AT&T for $75+ million and then leasing it back, and contracting AT&T to provision engineering and operations services.

The first part of that portion of the plan was unchanged by @Home's reversal on the decision to outsource engineering and operations, said Alison Bowman, director of Public Relations for @Home.

Bowman said that as talks between AT&T and @Home progressed, @Home -- under the leadership of new Chairman and CEO Patti Hart -- decided that it could do that work in-house and still meet the network performance goals it has set. However, the company will still turn to AT&T for consultation.

"We're no longer looking at completely outsourcing engineering and operations to AT&T," Bowman said. "As the talks evolved, we started to realize that we could meet the network performance goals that we have without outsourcing our network to AT&T.

The company characterized the new stance as a "simpler transaction under which the two companies would develop and design an enhanced network performance plan."

@Home is looking for AT&T to provide consulting and support services, albeit "on commercially reasonable, arms-length terms."

However, the plan is still under negotiation. The original letter of agreement set a deadline of June 16, 2001. It also stipulated that the "independent directors" of @Home (those not affiliated with AT&T) must agree that any agreement is in the best interest of @Home and its shareholders.



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