Covad Makes European Broadband Investment

[London, ENGLAND] U.S. broadband services provider
Covad Communications
announced Thursday that its first European investment
will be a majority share of Spain’s
Loop Telecom.

Loop is a full-service broadband provider serving
small and medium sized businesses. It has its own
backbone network in Spain and expects to be a
major player in the DSL market when the local loop
unbundled next year.

Covad is paying US $50 million for Loop Holdings
Europe AsP, which in turn owns 70 percent of
Loop Telecom, S.A. The payments are to be split
into a US $15 million initial payment, followed
by another US $15 million in 6 months and the
remaining US $20 million after one year.

Robert Davenport, chief executive of Covad Communications
International B.V., said the investment in Loop Telecom
was the first stage of Covad’s European entry
strategy.

“We are bringing our proven expertise in network deployment
and service delivery to a well-positioned, innovative
company that is a pioneer in the Spanish broadband market.
The synergies between Loop and Covad will definitively
accelerate the availability of high speed Internet access
to Spanish businesses,” Davenport said.

Covad, which now gets three seats on the
Loop Telecom board, plans to enhance the
Loop management team and improve service delivery
processes by bringing its own operating technology.

Loop uses a direct sales model and supplies
businesses with a variety of data services,
including broadband DSL for high-speed Internet
access, virtual private networks, local area networks
and services such as Web hosting, e-mail and
e-commerce.

Currently, Loop has offices in Madrid, Bilbao,
Valencia and Seville in addition to its headquarters
in Barcelona. It has plans to extend its network
to the whole Iberian Peninsula.

With the Spanish data market currently growing
at 25 percent per year, one of the highest
growth rates in Europe, prospects for Covad’s first
European venture appear good. Meanwhile, in the
U.S., it expects its network to reach 45 percent
of all homes and 50 percent of all businesses by
the end of the year.

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