KPN favorite to acquire KPNQwest

Bankrupt carrier KPNQwest NV is expected to be bought by its former parent Dutch telecoms incumbent Royal KPN NV for around 20m euros ($19.6m), after all the other bidders lost interest in the operation.

The level of the bid will be a bitter disappointment to the banks that were owed 220m euros ($215.6m) when KPNQwest went bankrupt in May. But while 40 potential bidders expressed an interest in the operation, their enthusiasm faded when they had a closer look at the books.

KPN is only interested in the KQ network, which covers the fiber-optic rings in the Netherlands, Germany France and the UK. It excludes the 10,000km Ebone IP backbone network, which was switched off last week after funds to keep it operational ran out and no bidder emerged. This is expected to be sold eventually for a nominal amount. A separate bidding process is under for the central European network.

KPNQwest was set up in 1998 as a joint venture between Royal KPN NV and Qwest Communications International Inc. KPN contributed 2,100 miles of network, transatlantic capacity and cash while Qwest has contributed the resources of EUnet, a European commercial internet service provider with nearly 84,000 customers and operations in 14 countries, transatlantic capacity and cash.

A period of hectic expansion followed but fierce competition and the level of its debt left it unable to survive current conditions in the industry.

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