360 Networks agrees to sell US-Ireland cable for $17m

Global  telecoms firm 360 Networks has agreed to sell its transatlantic cable linking the Republic with the US for just $17 million (€17.1 million), significantly below the $800 million it cost to build and deploy the 4,000-mile cable system.

The deal should provide greater international telecoms connectivity to Irish firms and enhance the Republic's reputation as a location for foreign direct investment.

Columbia Ventures, a Canadian private-investment firm, received court approval earlier this month to purchase the cable, which is the only direct telecoms link between the Republic and North America.

Regulatory approval for the acquisition is expected to be granted by the relevant government authorities by March 2003.

Mr Ken Peterson, chief executive of Columbia Ventures, which is best known for investments in the aluminium industry, said the firm would supply telecoms capacity between Dublin, New York and Montreal. This should appeal to US firms with operations in the Republic and Irish firms looking to provide services to North America.

Columbia Ventures will face stiff competition from Global Crossing, which provides similar services through its cable, which lands in Britain and the US before being linked to Dublin.

Cut-throat competition in the global telecoms market has reduced the cost of capacity enormously over the past two years and squeezed company margins. Crippled by billions in debt, both Global Crossing and 360 Networks filed for bankruptcy protection in the US and Canada last year.

Earlier this month 360 Networks, in which Irish entrepreneur Mr Denis O'Brien was a significant investor, became the first global network operator to emerge successfully from bankruptcy protection. Under the restructuring plan, shareholders and holders of $1.4 billion in unsecured bonds lost almost everything, and secured creditors agreed to convert most of their debt for 80 per cent ownership of the new firm.

360 Networks agreed to sell its transatlantic cable system to Columbia Ventures, despite receiving expressions of interest from Access Technologies and, according to media reports, from a prominent Waterford-based business man.

Columbia has agreed to assume some of 360 Networks's liabilities and pay $17.3 million in cash for the network, which is capable of carrying two million digitised photographs per second. The undersea cable consists of a 450-mile cable between Boston and Halifax, Nova Scotia; a 3,400-mile cable from Halifax to Dublin; a 3,300-mile cable from Halifax to Liverpool; and a 150-mile cable connecting Dublin to Liverpool.

Mr Patrick Coughlan, who previously worked with 360 Networks in the Republic, will manage the cable asset for Columbia from a base in Dublin. The sale of the cable system will include 360 Networks's cable station in Dublin.

Columbia Ventures will employ a small number of staff in the Republic to manage the cable and sell capacity on its network. It has also recently acquired telecoms interests in Iceland and the US.

360 Networks will now concentrate on running a 25,000-mile fibre optic network throughout Canada and the US, following disposals of telecoms assets in Europe, Asia and South America.