Qwest Communications International plans to make its fifth acquisition in a year, buying ISP Icon CMT Corp. in an all-stock deal worth about $185 million, and also plans to deploy a U.S. IP network and expand its backbone.
Icon, based in Weehawken, N.J., offers World Wide Web hosting and Internet connectivity and related services to business customers. The company had revenues last year of $52 million and is expected to report revenue of $80 million this year, according to Qwest.
The company has in the last year steadily acquired businesses, including LCI Communications and EUNet, a European Internet provider, that should help it attain its goal of providing a state-of-the-art fiber network.
Qwest has been aggressively trying to compete with major telecommunications providers that also now offer high-speed Internet access. The LCI acquisition made the merged company the fourth-largest long-distance carrier in the U.S., according to Qwest.
The most recent acquisition will "give us an immediate leadership position" working with companies intent on moving legacy systems to Web-based systems, said Qwest president and chief executive officer Joseph Nacchio at a press conference, where he also outlined a series of other announcements.
Qwest will advance up to $15 million to Icon for working capital requirements and other purposes. The acquisition will be accounted for as a purchase and is subject to approvals from Icon stockholders and federal regulators. The deal is expected to close within 90 days.
A decision has not yet been made about whether Icon's name will be changed, Nacchio said. Icon has more than 400 employees and Nacchio indicated they will continue working for the merged company.
Nacchio also announced that Qwest will offer new IP services, including high-speed dedicated Internet access. The network will offer speeds up to OC-48, a digital transmission standard that transmits data up to 2.4886G bit/sec. Network deployment is expected this year.
IP-based offerings also will include virtual private network services and expansion of Qwest's Q. Talk voice-over-IP network service.
Rudin Management Company, Inc., a New York-based commercial real estate firm, has been signed as the first OC-48 customer, signing a two-year deal that Qwest said is valued at about $36 million.
The company will expand IP voice services to 125 cities in 29 states by the year-end and the Qwest backbone will reach 135 cities by the middle of next year, Nacchio said.
Construction is under way on 17,500 miles of the national backbone, Nacchio said; about 9,000 miles are already in service.
Qwest also said today that it will enter the World Wide Web hosting business, opening 10 CyberCenters for customer hosted applications. Centers in San Francisco, Los Angeles, New York and Washington, D.C. will open by year-end with centers in Seattle, Dallas, Chicago, Detroit, Atlanta and Miami opening next year.
Qwest further intends to expand its physical presence through the opening of a national accounts sales division that is now being staffed by more than 100 account managers. That sales force will expand to 180 by the end of this year and to 300 by the first quarter of next year, Nacchio said.
The sales division will focus on selling IP services to multinational clients.
This series of announcements should push other telecommunications carriers to boost networks and offer higher-speed access, Nacchio predicted.
"I see us as an interesting agent of change in the industry," he said.
RELATED LINKS
Network World Fusion, 6/17/98
A $4.4 billion Qwest for LCI
Network World, 3/16/98.
New kids on the long-distance block
A look at Qwest and other telecom start-ups. Network World, 1/12/98.
Qwest financial and stock news
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