Interoute CEO eyes east European acquisitions
Last Update: 10:32 AM ET Nov 20, 2006
By Daniel Thomas
Of DOW JONES NEWSWIRES
LONDON (MarketWatch) -- European telecommunications network provider Interoute is sizing up acquisition targets in Eastern Europe and the Middle East, as it looks to expand its voice and data fibre network.
Speaking to Dow Jones Newswires, Executive Chairman James Kinsella said the company, known for its strategy of buying up and turning around distressed assets, is also eyeing potential assets in Turkey.
"If there are opportunities to buy companies at good prices then we will go east and south from our current network," he said.
Privately-owned Interoute, which provides fiber optic voice and data networks to large corporates and telecommunications operators in 21 countries, added that it was looking to acquire ongoing concerns with established customer bases, rather than distressed assets.
Over the past five years Interoute has built up its 12,000 customer base and 35,000 kilometer fiber network by buying a number of one-time telecommunications stars, such as PSINet, Ebone and CeCom, that failed to recover from the dotcom crash.
"We took an approach of buying up key assets at a tiny fraction of what it cost to build them. We did that at a time when there was a great opportunity to buy things up, but we had a certain amount of luck," said Kinsella. He added that with a lack of distressed assets available in the market, Interoute is shifting its attention to high revenue yielding companies in emerging markets.
In August, Interoute acquired Bulgarian telecommunications company Telecom Partners Network to build its voice, data and internet presence in Eastern EuropeThe deal was helped by a recent EUR125 million investment from Dubai Holdings into Interoute. The fund is likely to help aid future acquisitions says Kinsella.
Interoute also said last month that it is investing EUR22 million in a network upgrade across Europe to speed up the time it takes to provision services for customers and also meet the growing internet capacity demands, resulting from the launch of video clip and digital content services, such as YouTube (GOOG). Ciena Corp.(CIEN) will provide the infrastructure for Central and Eastern Europe, while Infinera Inc. will work on the upgrade in Western Europe.
Kinsella, a former journalist, joined Interoute in 2002 from World Online, where he was Chairman. During his four years at Interoute Kinsella has lead the company's restructuring plans.
Interoute, which listed on AIM in 1996, delisted again the next year after it was bought by private equity group, the Sandoz Family Foundation.