Call-Net to acquire business customer base and certain network facilities of 360networks in Ontario, Quebec and Atlantic Canada,
27 May 2004 - 12:01AM
PR Newswire (US)
Call-Net to acquire business customer base and certain network
facilities of 360networks in Ontario, Quebec and Atlantic Canada,
from Bell Canada Call-Net to hold conference call at 3:00 p.m. to
discuss today's announcement TORONTO, May 26 /PRNewswire-FirstCall/
-- Call-Net Enterprises Inc. today announced that it has entered
into an agreement with Bell Canada to acquire certain assets of
360networks Corporation including significant portions of its
business customer base and specific network facilities in Ontario,
Quebec and Atlantic Canada. "We are very pleased to enter into an
agreement with Bell Canada to acquire 360networks' business assets
in Eastern Canada," said Bill Linton, president and chief executive
officer of Call-Net Enterprises. "On closing, this transaction will
greatly increase our business customer base and will allow us to
more rapidly and cost-effectively expand our local, fibre and IP
networks in Eastern Canada, further reducing our reliance on leased
facilities. This transaction supports our strategy of providing
unique telecom services to the small and medium size enterprise
segment and increases our effectiveness and cost structure in
offering services to multi-national customers in partnership with
Sprint." The transaction is conditional on Bell Canada's
acquisition of the Canadian assets of 360networks Corporation and
certain related U.S. interconnect assets, announced earlier today.
In its announcement, Bell Canada stated that it intends to retain
360networks' facilities and customer base in Western Canada and
will sell significant portions of 360networks' business customer
base in Eastern Canada to Call-Net. Call-Net will enter into a
two-year transitional services agreement with Bell to provide
technical and operational services to the newly acquired customer
base and in exchange be paid approximately 70 per cent of the total
retail revenue. Call-Net's acquisition price for the business
customer base represents approximately three months of acquired
revenue and will be paid over the term of the agreement. The
360networks business customer base in Eastern Canada is expected to
add in excess of $50 million to Sprint Canada's total business
revenue. Earnings before interest, taxes, depreciation and
amortization of the acquired customer base is expected to be
comparable in margin to Call-Net's existing business. Call-Net will
have an option at the end of the term of the agreement to acquire
certain assets used to service these customers. "The transaction is
financially attractive and will further solidify our position as a
competitive alternative telecommunications provider to business and
residential customers," added Linton. "It strengthens the mix of
local and data business revenue, provides us with the opportunity
to acquire certain network facilities at a significantly reduced
capital cost, gives us access to 1,000 office buildings in Ontario,
Quebec and Atlantic Canada and certain rights to consider acquiring
additional local facilities in this territory." Call-Net's
transaction is expected to close by September 2004 concurrent with
the finalization of Bell Canada's acquisition of 360networks and is
subject to customary terms and conditions including due diligence,
the completion of mutually satisfactory definitive agreements,
board and regulatory approvals. Conference call at 3:00 p.m. today
Call-Net will hold a conference call for all interested parties at
3:00 p.m. (ET) today to discuss this matter. To participate in the
conference call dial 416-695-6140 or 1-877-667-7774 (Participation
code: T501237S), or join via audio Web cast at
http://www.callnet.ca/. Replay will be available at 416-695-5275 or
1-888-509-0082 until June 2, 2004. The audio webcast will be
archived at http://www.callnet.ca/ About Call-Net Enterprises Inc.
Call-Net Enterprises Inc., (TSX: FON, FON.B) primarily through its
wholly owned subsidiary Sprint Canada Inc., is a leading Canadian
integrated communications solutions provider of home phone,
wireless, long distance and IP services to households, and local,
long distance, toll free, enhanced voice, data and IP services to
businesses across Canada. Call-Net, headquartered in Toronto, owns
and operates an extensive national fibre network, has over 148
co-locations in five major urban areas including 31 municipalities
and maintains network facilities in the United States and the
United Kingdom. For more information, visit http://www.callnet.ca/
and http://www.sprint.ca/. Note for Investors: This news release
may include statements about expected future events and/or
financial results that are forward-looking in nature and subject to
risks and uncertainties. For those statements, we claim the
protection of the safe harbour for forward-looking statements
provisions contained in the Private Securities Litigation Reform
Act of 1995. The Company cautions that actual performance will be
affected by a number of factors, many of which are beyond its
control. Future events and results may vary substantially from what
the company currently foresees. Discussion of the various factors
that may affect future results is contained in the company's recent
filings with the Securities and Exchange Commission, the Ontario
Securities Commission and SEDAR. DATASOURCE: Call-Net Enterprises
Inc. CONTACT: Media Contact: Karen O'Leary, Corporate
Communications, (416) 718-6445
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