Williams speeds up network buildout
The new age carrier plans to finish building its new 32,000-mile fiber optic network a year ahead of schedule and will spend an additional $2 billion to get the job done.
Williams, the telecommunications unit of natural gas distributor Williams Companies, said it will spend $4.7 billion, up from an initial $2.7 commitment, to finish the fiber optic network in 2000. The company said increasing demand for its network services--following its recent deal with SBC Communications--is behind the stepped-up construction efforts.
The network, currently spanning 19,000 miles, is expected to total 26,000 miles by the end of the year. When it is completed in 2000, Williams' network will link 125 cities in the United States.
SBC, which owns several regional phone companies, including Pacific Bell and Southwestern Bell, will invest about $500 million in Williams in exchange for access to its network.
Analysts said the company's new partnership has no doubt pushed up the completion date.
"SBC wants it done soon, it's pretty simple," said Philip Wohl, a telecommunications analyst with financial publisher S&P Equity Group. "There seems to be an urgency that wasn't there before. [The SBC alliance] gives them a plan; I think you'll see that relationship grow over time."
Williams is among a handful of new telecommunications carriers in the process of building packet-switched networks designed to carry data as well as voice.
Williams' business model calls for selling capacity to other carriers and large corporations. Williams' customers include US West, Concentric Network, and WinStar Communications.
SBC, like the other Baby Bells, is anxious to get into the lucrative long distance voice market--but didn't have the nationwide network to do so previously.
Analysts, however, don't expect the Baby Bells to get into long distance service in earnest before the end of the year. Wohl predicts BellSouth will also align with a new networking company like Williams.
"[Williams is] in the same boat as Qwest and the others. They want to be attractive to the Baby Bells...because they really can't survive by themselves," Wohl said.
Other analysts' have echoed Wohl's concerns. New-age carriers, like Qwest Communications International, Level 3 Communications, IXC Communications, and Frontier, have been viewed as attractive takeover targets as their network buildouts continue.
Qwest has completed 13,000 miles of its planned 18,500-mile network. The company expects to finish construction by mid-year 1999. IXC has finished 9,300 miles to date and expects to have 16,500 miles of fiber in the ground by the end of the year.
Williams also is planning to spin off its telecommunications unit in an initial public offering worth an estimated $750 million.
The company completed the Midwestern portion of its network last month.