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UUNet chases European market

UUNet acquires the Netherlands' largest ISP, NLnet, the latest in a string of European acquisitions by major Net providers.

UUNet (UUNT) announced today that it has acquired the Netherlands' largest Internet service provider, NLnet, the latest in a string of European acquisitions by major Net providers.

The deal puts UUNet among a growing group of Net access firms that are broadening their presence in Europe. The company plans to expand into Sweden this year as well.

"The acquisition furthers our strategy to have end-to-end Internet services from any part of the world to another part of the world," Eric Scace, UUNet vice president for international development, said today.

UUNet's strategy is to be the world's leading provider of Net connections for businesses. The acquisition of NLnet adds 45 PoPs (points of presence) to UUNet's network. NLnet's existing customers will also gain access to the UUNet fiber network in Europe.

WorldCom, UUNet's parent company, already owns and operates Net backbones in the United Kingdom, Germany, Belgium, the Netherlands, and Luxembourg. UUNet peers with other networks in 50 countries.

No cash changed hands in the NLnet acquisition. Instead, the companies exchanged equity, with WorldCom receiving 100 percent of NLnet's stock. The 60 NLnet employees will remain and work for WorldCom. The new WorldCom subsidiary will be called UUNet NL.

"When measured on a per capita basis, the Netherlands has one of the highest Internet usage levels in the world," Scace added. "NLnet is the strongest Internet provider in the Netherlands; they have been offering services in one way or another since the 1980s."

WorldCom already has boosted technology investment in its European networks. "The acquisition works with our current international network expansion, including a 30-gigabit trans-Atlantic cable system, an initial $200 million investment in a pan-European broadband network, and new city networks in Amsterdam and Brussels, Belgium," WorldCom CEO Bernard Ebbers said in a statement.

Other U.S. Net access providers also are tapping the European online market. According to Jupiter Communications, Germany and the United Kingdom respectively have the third and fourth largest number of online households in the world, following the United States and Japan. Germany and the United Kingdom will continue to lead the increase in European Net usage, Jupiter says, with Italy, France, Sweden, and the Netherlands driving the growth of worldwide users through 2000.

In late August, for example, CompuServe Network Services announced peering relationships to gain access to 76 networks in Western and Eastern Europe, 15 networks in Germany, and 7 in France. Peering allows ISPs of similar size to route each other's email or Web data.

In addition, America Online expanded AOL Europe last fall to include its service in Austria, Switzerland, and Sweden. PSINet partnered with the Chatterjee Group last September to broaden its reach in Europe. The deal will build a $100 million Internet network across the continent.