Cable & Wireless invests $500m in European ISPs

Cable & Wireless (C&W) has outlined its determination to focus on the business market with the $500m acquisition of ten European ISPs.

Two of the acquisitions were made earlier in 1999 - ECRG in Germany and INS in the UK. The eight recent buyouts include agri.ch and Petrel Communications in Switzerland Intercom in Spain IDSneret in France Online Internet in Belgium DSLogic-DSNet and Unidata in Italy and Xpoint in Austria.

C&W will invest a further $500m to improve its European network connections for over 200 cities. It supplements a $1bn investment programme to build its core IP network throughout the continent.

Graham Wallace, CEO of C&W, said: "This is a major step in our strategy to focus on business customers and provide data and IP services for them."

Ian Williams, senior analyst at Datamonitor, said the move is a good one for the company. "The ISPs it has bought are leading, business ISPs with a large customer base," he said.

Williams argued the investment not only strengthens C&W's global position to help it avoid a potential merger, but also makes it a very attractive option to application service providers (ASPs).

C&W has gained major corporate clients such as 3Com, BMW, Lufhansa, McDonalds, Oracle and Volvo through the ISPs. According to Williams, the deal will benefit both these and C&W's existing customers in the UK.

"This will particularly benefit its multinational customers. At the moment they would have to arrange a different ISP for each company and hope that they have peering arrangements. Although this doesn't necessarily affect the quality of service, if Cable & Wireless owns the whole network it can offer multinationals much better business services, such as virtual private networks," he said.

He added: "This is definitely a sign that Cable and Wireless is moving away from the consumer market and concentrating on the business sector."