France Telecom and Equant join hands

Buying international telecommunications service may get easier as France Telecom and Equant join forces.

Last week the companies announced a series of transactions giving France Telecom a controlling interest in the Dutch telecommunications company.

The deal includes France Telecom's purchase of a 54.3% interest in Equant and the sale of France Telecom's Global One Communications business to Equant for $300 million in cash and a stock exchange.

France Telecom is also taking over the Sita Foundation's interest in Equant. Sita, an airline industry consortium, has been exclusively using Equant's network services around the world for years, but will soon be able to negotiate deals with other service providers.

U.S. users in need of data services overseas will benefit because the joined company will offer greater geographic reach for managed data services, says Brownlee Thomas, an analyst at Giga Information Group.

"Business users want managed services overseas and Equant has done a good job of bringing those types of services to market," she says. "Global One will have access to the same service portfolio."

The combined company will offer managed IP, frame relay and other data services in more than 100 countries around the world.

Another benefit to customers is that the separate networks should integrate easily because both are based on Nortel and Cisco gear, Thomas says.

But one big market the joint venture still does not address is the U.S. While Global One and Sprint have a reciprocal resale arrangement, Equant and Global One do not own network facilities in the U.S., Thomas says. France Telecom is in the process of building a 28-city network in the U.S., but the company needs a stronger play here, she says.

Competition over which company will be the global telecommunications leader for business users is heating up, Thomas says. Domestic carriers, such as WorldCom and AT&T through its Concert joint venture with British Telecom, have stiff competition. "The next big international deal will come when Cable & Wireless and Infonet will likely merge," she says.

The France Telecom/Equant deal is subject to regulatory approval but is expected to close in the second half of 2001.

Laura Rohde with the IDG News Service contributed to this story.