ISPCON Panel: Merger Mania Expected to Decline

The frenetic pace of buyouts and mergers
within the Internet and network technologies will slow in the coming
year, according to a panel of Internet executives speaking at ISPCON
Fall ’98.

While some of the big players who have merged or purchased other
entities look to integrate networks, operations and corporate cultures,
the lively pace of acquisitions will subside through the end of 1998,
and into the beginning of 1999.

“It’s a matter of who has scratched the itch, and who hasn’t,” said
Roger Pilc, vice president of Business Development at WinStar
Communications, which purchased data services integrator LANSystems,
long distance and Frame Relay provider MIDCOM Communications, and
national backbone GoodNet within the last year.

Noting that the Regional Bell Operating Companies (RBOCs) and foreign
companies have made relatively few acquisition moves in the industry
due to regulatory restrictions, Ronald Vidal, senior vice president of
New Ventures at Level 3 Communications, said that the mergers and
purchases will continue, albeit at a slower pace. He believes that someday
in the future
those restrictions will fall, and the one “who is not going to have a
chair when the music stops,” will be the loser.

Level 3 recently purchased miknet Internet Based Services, a German
Internet service provider based in Frankfurt. John Russo, president and
CEO of GeoNet Communications, a regional Internet service provider
headquartered in Redwood City, California, also announced that his
company’s merger with Level 3 Communications was completed Wednesday

Larry Sledge, the senior director of corporate planning & development at
Intermedia Communications, said he believes future acquisitions will
involve companies whose technology will enhance current services.

Innovation and the emergence of new technologies will determine when
companies like Intermedia will return to the acquisitions market.
Intermedia acquired National Telecommunications of Florida, a
switch-based competitive local exchange carrier (CLEC) and
interexchange carrier in April 1998; LDS Communications Group, a
regional interexchange carrier headquartered in Monroe, Louisiana in
March 1998, and DIGEX, national Internet carrier focused on business
customers in July 1997.

The panel also agreed that future mergers and acquisitions will
probably be larger and more strategic than the rush of buyouts and
mergers that hit the industry in the last three months.

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