Czech ISP Cesnet Acquired by Tele Danmark Joint Venture

Contactel Ltd, a joint venture between Danish telco Tele Danmark and
Czech telecom company Ceske Radiokomunikace, won a bid to acquire a majority stake in Czech ISP
Cesnet.

Cesnet serves about 8,000 dial-up
customers as well as about 600 leased lines. It ranks with Internet On Line and VOL as the top ISPs in the country.

The proposed acquisition applies to the commercial part of Cesnet only.
The academic network TEN-155 which is operated in the Czech Republic by
Cesnet will be retained, as well as its services for
universities. Cesnet will effectively, if not soon absolutely, be divided into two parts.

The actual terms of the contract between Contactel and Cesnet are still
negotiated. The price is also unknown; Czech analysts estimate
relatively high sum between 200 and 500 million CZK (US$6 to 14.5
million).

Cesnet is the last ranking Czech ISP without foreign capital. The most important foreign player in the Czech ISP market is KPNQwest, which controls three major local providers: EUnet Czechia, Luko-Czech Net and Internet On Line, which it runs through its stake in the principal Czech telco Cesky Telecom. VOL is owned by Italian entrepreneurs, while local cable companies, which are also prospective ISPs, are in the hands of Dutch capital.

Contactel is one of the expected
favorites of the Czech telecommunication sector once the market is liberalized, a move which is due by the end of this year. Contactel and another local company, Aliatel,
are currently preparing to compete with existing monopoly of Cesky
Telecom.

Cesnet was founded in 1996 as the
association of Czech universities and Academy of Sciences. The primary
purpose of Cesnet was to provide Internet access and other computational
services to the schools and universities, but soon a commercial branch was launched. Cesnet reached revenues of approximately 180 million CZK (US$5.2 million) last year.