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Alcatel, 360networks seal billion-dollar deal

The French telecom equipment maker will make a $1 billion investment in 360networks, and the Canadian telecommunications carrier agrees to buy at least $1.2 billion worth of Alcatel equipment.

French telecom equipment maker Alcatel plans to make a $1 billion investment in 360networks, as the emerging Canadian telecommunications carrier has agreed to buy at least $1.2 billion worth of Alcatel equipment.

Alcatel executives on Tuesday said the company will immediately buy $700 million of 360networks' stock at $21.72 per share. The company plans to purchase another $300 million in 360networks' shares by 2012.

As part of the deal, 360networks announced it will buy about $1.1 billion of Alcatel's optical network equipment to build a new undersea telecommunications network that will connect the United States and Canada with Japan.

360networks also agreed to buy at least another $100 million in Alcatel equipment for its land-based network.

The carrier, which is building a global fiber-optic network, also announced plans to build a second undersea network in the Atlantic Ocean, connecting New York to the United Kingdom. 360networks will receive the additional $300 million investment from Alcatel if the carrier chooses Alcatel as an equipment supplier.

Alcatel, which announced strong third-quarter earnings Tuesday, competes against Nortel Networks, Lucent Technologies, Cisco Systems and others in the hot market for optical networking equipment--technology that allows carriers and service providers to send larger amounts of Net traffic across their networks at faster speeds.

360networks' deal with Alcatel is not exclusive, meaning the company can still buy telecommunications equipment from other companies. For example, 360networks previously announced plans to purchase $420 million worth of networking gear from Sycamore Networks.

In other news, BellSouth on Tuesday announced plans to acquire Cisco optical networking equipment for its network in Florida.

The new network access point, dubbed the Florida Multimedia Internet Exchange, or FloridaMIX, is expected to link networks serving Latin America, the Caribbean, Africa and Western Europe. Terms of the deal were not disclosed, but Cisco will become the primary equipment supplier for the project, contributing 70 percent of the gear, the company said.

BellSouth is also buying equipment from Sycamore to build the exchange.