@Home Reconsiders Plan to Outsource to AT&T

Leading cable broadband provider [email protected] 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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