RealTime IT News

Level 3 Networks Into Viatel

Global communications and information services concern Level 3 Communications said it has acquired the transatlantic network of Viatel Inc., which is in bankruptcy proceedings. Level 3 said a federal judge overseeing Viatel's Chapter 11 bankruptcy approved Level 3's purchase on Tuesday, and the transaction was closed on Wednesday.

Specifically, Level 3 has purchased from Viatel two fibers on the "Yellow" submarine cable connecting London and New York. This is the same fiber pair that Level 3 sold to Viatel in April 2000. Level 3 now owns and controls 50 percent of the fibers on the Yellow cable.

Under the terms of the transaction, Level 3 retains all cash payments already made by Viatel under the April 2000 contract, including $94 million paid to Level 3 at the end of last year. In return for the Yellow fiber pair, Level 3 has released Viatel from debts registered with the bankruptcy court totaling approximately $9 million. Viatel has also transferred 20 gigabits of capacity on the separate transatlantic cable known as "AC-1" to Level 3.

"We believe this transaction will create value for us, and we continue to look for opportunities as they develop in the current market environment," said Kevin O'Hara, Level 3's president and chief operating officer. "With this transaction, we have effectively cut in half our cost basis for transatlantic capacity."