The telecom sector contracted some Tuesday, after officials from Cogent Communications and FiberNet Telecom Group announced separate acquisitions.
The Washington, D.C.-based Cogent, for the first time, enters the European market, buying up LambdaNet Spain and France. The two carriers are former subsidiaries of Firstmark Communications, a European carrier with operations throughout the continent, which restructured in 2002 and is continuing to look for a way to wipe out its debt load.
Dave Schaeffer, Cogent CEO, values the deal around $20 million in stock, and plans to headquarter its European operations in Paris for the time being. Cogent is also looking at acquiring LambdaNet’s operations in Germany in the next couple years and moving its headquarters there.
“It’s really dependent on our ability to successfully help the German entity negotiate its bank debt to a form that would then make a new investment and merger rational,” Schaeffer said.
The two LambdaNet centers were built in 2001 by Firstmark (renamed LNG Holdings S.A. after it restructure) to provide Internet services and data transport for European telecommunications companies, Internet service providers and corporate networks. At one time, Spain and France were key telecom centers for LNG, which was spreading outside Germany and into Europe in the late 1990s, early 2000.
Cogent already has a significant telecom footprint in the U.S., with an OC-192 fiber-optic pipe reaching from California to New York, as well as metropolitan OC-48s in major cities throughout the country. In 2002, it bought out most of the assets of bankrupt PSINet, at one time one of the largest long-distance backbone providers in the world.
With the acquisition in hand, Cogent plans to expand its success in the U.S. across the Atlantic Ocean. Schaeffer said telecom carriers’ today need to expand if they expect to succeed.
“Cogent really does need to have a greater network breadth and the architecture that had been built by LambdaNet seemed to make a lot of sense because in many ways it was similar to the underlying architecture that we had built here in the U.S.,” he said. ”
The company said it would continue providing point-to-point transport and transit services for LambdaNet’s existing customers, and merge Cogent’s product set and pricing to the European division.
Meanwhile, in New Jersey, officials at FiberNet Telecom announced Tuesday said they had just taken over Gateway Colocation’s communications hub for $3.8 million in stock and $170,000 in cash. Gateway’s founder, Oskar Brecher, will join FiberNet on the board of directors.
Gateway is a carrier hotel, hosting the Internet equipment (routers, switches) for telecom carriers between long-haul data networks and the metropolitan loops. Its customers include AT&T, WorldCom, Level 3 and Verizon.
FiberNet officials said the location of the colocation facility, on 165 Halsey Street in Newark, N.J., was the goal of the purchase. The company has another carrier hotel on Pavonia Avenue in N.J., and another seven in NYC. The Gateway facility, they say, is the premier carrier hotel in New Jersey and provides network redundancy for the greater New York metropolitan area.
While the location was great, the facility still had problems, which made the buyout possible. Gateway’s current customer crop only accounted for 60 percent of the colocation building’s 49,000-square-foot space, something Michael Liss, FiberNet president and CEO wants to change.
“We believe that there is an opportunity for FiberNet to fill the vacant colocation space in the facility with one or more customers seeking fully redundant space outside of New York City,” Liss said in a statement.
