COLT Telecom Group plc

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COLT Telecom Group plc

15 Marleybone Road
London NW1 5JD
United Kingdom
Telephone: (44)20-7863-5000
Fax: (44)20-7863-3701
Web site: http://www.colt-telecom.com

Public Company
Incorporated: 1992 as City of London Telecommunications
Employees: 2,210
Sales: £687 million (2000)
Stock Exchanges: London NASDAQ
Ticker Symbols: CTM.L COLT
NAIC: 513310 Wired Telecommunications Carriers

Since it was founded in 1992 in the City of London, COLT Telecom Group plc has grown from a local fiber-optic network provider into a leading pan-European telecommunications company. During the latter half of the 1990s COLT built fiber-optic networks in 27 European cities in 11 countries. The company plans to provide an IP-based European network, COLT EuroLAN, that would link Europe’s major business buildings into an effective single local area network across Europe. COLT also offers digital subscriber line-based (DSL) services in France, Germany, and the Netherlands, and plans to expand DSL service to nine European countries by 2001. COLT also operates 10 Internet Solution Centres (ISCs) that serve companies that want to outsource their Web hosting and other Internet-based services. COLT plans to have 20 to 24 ISCs in operation by early 2002. By late 2000, COLT had installed 2,676 route kilometers of fiber-optic cable in its city networks and had 5,277 buildings connected to its networks. COLT EuroLAN, the company’s 15,000 route kilometer pan-European intercity network, was under construction, with a 3,000 kilometer intercity network in Germany coming online in July 2000.

London Telecommunications Service: 1992–94

COLT Telecom Group was formed in London, England, in 1992 by the venture capital arm of Fidelity Investments, the largest privately held mutual fund and investment company in the United States. COLT was an acronym for City of London Telecommunications. Fidelity persuaded an AT&T executive, Paul Chisholm, to relocate from Boston to London to be COLT’s president and CEO, a position he retained until 2001.

In 1993 COLT obtained a PTO (telecommunications) license and completed the first 15 kilometers of its fiber-optic network in the City of London. COLT gained its first customer and received a “considerate contractor” award from the Corporation of London. The news service Reuters chose COLT’s plan to link its television studios to video cameras on London’s stock exchanges over those submitted by British Telecommunications plc and Cable & Wireless pic. For the rest of the decade COLT enjoyed a good reputation for service as it deployed its fiberoptic network in cities throughout Europe. In 1994 the company signed interconnect agreements with British Telecom and Energis plc and became Energis’s preferred local supplier.

Expanding into Europe: 1995–97

In 1995 COLT was granted a U.K. Telecommunications Operators license from the Department of Trade and Industry, which allowed COLT to expand beyond London. The company completed the initial phase of its fiber-optic network in London’s West End. A telecommunications license for Frankfurt, Germany, allowed COLT to begin its European expansion.

In 1996 COLT Telecom GmbH was established in Frankfurt, Germany, with more than 50 kilometers of network. COLT France was awarded a license to operate in Paris. COLT Telecom Group plc became a public company, with stock trading on the London Stock Exchange in the United Kingdom and NASDAQ in the United States.

In 1997 COLT accelerated its growth in Europe, bringing new networks online in Munich, Hamburg, and Berlin in Germany, for a total of six city networks. The company received more awards, including the FX award as the best telecommunications supplier in the City of London. COLT received approval to construct networks in Zurich, Switzerland, and Brussels, Belgium. During the year, it signed interconnect agreements with France Telecom and Deutsche Telekom AG. In the United Kingdom, COLT launched its first Internet services.

More Internet Services: 1998–2000

In 1998 COLT made two important acquisitions: France’s leading independent corporate Internet service provider (ISP)ImagiNet, and Telecom Noord West N.V. in Amsterdam, which was renamed COLT Telecom N.V. New licenses obtained during the year included a switched voice license in Spain, and a license for Milan, Italy. By the end of 1998 COLT was operating networks in 12 European cities, having added Dusselforf, Germany, and Zurich, Switzerland, during the year.

For 1998 COLT reported revenue of £215 million, a 164 percent increase over its 1997 revenue. COLT’s strong financial performance in 1998 helped get it listed on London’s exclusive list of blue chip stocks, known as the FTSE-100 Index, or “Footsie.” COLT also benefitted from the telecommunications deregulation taking place in Europe, which allowed other companies to compete with established telecommunications monopolies. COLT was gaining market share in Europe by offering a high level of customer service. Its own dedicated fiber-optic network offered better service, in most cases, than the older networks of the established telecommunications giants.

COLT reduced the risk involved in building new fiber-optic networks by first obtaining commitments from a core group of large corporate customers. It then built fiber-optic networks, or “backbone,” just for those customers. New capacity to the network would be added only if COLT expected to get its money back within 24 months.

In 1999 Peter Manning joined COLT as chief operating officer. During that same year, the company COLT expanded its European network by bringing Stuttgart, Germany; Geneva, Switzerland; Barcelona, Spain; Cologne, Germany; Vienna, Austria; and Lyon, France, online. In December, COLT also began providing this service in Rotterdam, Netherlands, and Marseilles, France. In Germany COLT began constructing an intercity network.

The awards that the company received in 1999 included the U.K. carrier of the year and an accolade from CIGREF, the primary French corporate telecommunications user group. Reuters selected COLT as its pan-European service provider. An interconnect agreement was signed with Spain’s Telefonica in October. COLT announced plans for four new city networks in Hanover, Germany; Rome, Italy; Turin, Italy; and Stockholm, Sweden. The company also announced plans to offer Web hosting capabilities in four Internet Solution Centres (ISCs) in Amsterdam, Frankfurt, London, and Paris. By the end of the year COLT Internet was available in Belgium, France, Germany, Italy, The Netherlands, Spain, Switzerland, and the United Kingdom. COLT planned to have more than 10 ISCs in service by the end of 2000.

During 1999 COLT raised £1.2 billion and planned to spend some £2.5 billion over the next four years. At the end of the year the company operated 1,892 route kilometers (1,175 route miles) of local digital fiber-optic network and was providing service to customers in more than 3,700 buildings.

During the first quarter of 2000 COLT gained 762 new customer accounts for a total of more than 5,000. The company enjoyed strong demand for high bandwidth service as well as for data and Internet-related services. In London the company had more than 230 corporate Internet customers, nearly double that of the previous year. LANLink 1000 was a recently launched service for corporate customers that featured a fully managed Gigabit Ethernet service for Local Area Networks (LANs). Plans for new networks in Birmingham, England, and Dublin, Ireland, were in advanced stages. COLT expected to complete construction of its intercity network in the United Kingdom by the end of 2000, with the network becoming operational during the first quarter of 2001. Germany was COLT’s second most significant source of revenue after the United Kingdom. Revenue in France increased 78 percent over the same quarter of 1999, and the company launched its first commercial service that used digital subscriber line (DSL) technology in Paris and Lyon. COLT’s DSL service in France utilized France Telecom’s wholesale service offering. During the quarter Microsoft France began contributing to the COLT Internet Start Up Program, which was designed to help start-up Internet companies become established.

In January 2000 COLT announced that it had completed construction of its Internet Solution Centres (ISCs) in Amsterdam, Frankfurt, Paris, and London, giving the company about 120,000 square feet of Web hosting capacity in the four European cities. By the end of 2000 the company planned to have 500,000 square feet of hosting capacity in ten to 12 centers, with further expansion planned for 2001. COLT’s goal was to become the premier web hosting enabler of e-business across Europe. COLT’s ISCs would serve the need of companies wanting to outsource their e-services or Web hosting.

Company Perspectives:

COLT is one of the new competitive telecommunications companies operating in Europe. Founded in 1992, COLT operates an integrated IP-based (Internet protocol) pan-European network linking the financial and business centers of Europe, providing the full range of telecommunications services to high value corporate and carrier customers. COLT operates in 25 European cities in nine countries and plans to provide sendee in 30-32 European cities by the end of 2001. COLT is currently interlinking its city-based networks to create a truly pan-European network. COLT has established a reputation for first-class service and is increasingly regarded as the preferred supplier of high bandwidth telecommunication services. The COLT brand is synonymous with quality, reliability, and value.

To finance the further expansion of its Internet services, including content distribution and the development of its Application Service Provider (ASP) enabling capacity, COLT placed nearly 13 million ordinary shares on the London Stock Exchange in March and April at £38.52 per share. Together with a placing of convertible notes, COLT expected to raise about £600 million. The proceeds would also be used to finance the wider deployment of DSL-based services across Europe, the further expansion of the company’s intercity network infrastructure in France, and its extension to Spain and Scandinavia. At the end of March 2000 COLT announced that its 20 route kilometer network in Turin, Italy, was operational; it was COLT’s 21st fiber-optic city network in Europe.

By May 2000 COLT’s stock had increased 30 times in value since it began trading in 1996. Stock options issued to COLT executives had made 150 of them millionaires. Although capital spending had kept COLT from reporting a profit, the company expected to become profitable in 2003. Also in May COLT launched its fiber-optic city network in Hanover, Germany. Hanover was COLT’s 22nd European city network and its eighth in Germany.

COLT accelerated the development of its pan-European network, called COLT EuroLAN, by striking development deals with other network and infrastructure providers. In April it purchased 4,500 route kilometers of network from Louis Dreyfus Communications in exchange for 2,900 route kilometers of duct network in Germany. The agreement gave COLT additional infrastructure connections between its city networks in Paris, Lyon, Marseilles, Turin, Milan, Geneva, and Zurich. In June COLT announced a pan-European agreement with Telia, whereby COLT would acquire 3,600 route kilometers of network in Scandinavia and Austria in exchange for some 3,000 route kilometers in Germany.

In April COLT expanded its alliance with Cisco Systems, Inc., making Cisco its preferred IP equipment supplier. Cisco would develop applications for new business areas and address systems integration, support, and network management. COLT would gain access to Cisco’s advanced IP technologies for voice and data convergence, worldwide IP-VPN (virtual private network) services, web hosting, ASP enabling capabilities, e-commerce solutions, and Internet billing.

In June COLT and Inktomi Corporation announced plans to enhance COLT’s Internet network with Inktomi’s network infrastructure technology. The Inktomi Traffic Server would provide core technology for COLT’s network of Internet Solution Centres (ISCs), while Inktomi’s Content Delivery Suite would allow COLT to deliver on-demand broadband service to its customers. COLT planned to have a network of 20 ISC’s in place by the end of 2001. In June COLT opened ISCs in Madrid, Spain, and Milan, Italy. In July 2000 the first phase of COLT’s 14,000 route kilometer pan-European network (COLT EuroLAN) began operating with the opening of its 3,000 kilometer German intercity network.

In August 2000 COLT announced that Peter Chisholm, president and CEO, planned to return to the United States in 2001. The company initiated a search for his successor. In January 2001 COO Peter Manning was named to succeed Chisholm as president and CEO of COLT. Under Chisholm’s leadership, COLT had grown from little more than an idea to a leading pan-European communications company.

In September 2000 COLT launched its fiber-optic city network in Rome with an initial 20 route kilometers. It was COLT’s 23rd European city network. Also in September COLT announced a strategic partnership with the Hewlett-Packard Company to rollout a comprehensive suite of online computing and services capabilities across Europe. HP would provide the “always-on” computing infrastructure and full range of e-services solutions for COLT’s European network of ISCs. Other developments in September included the launching of COLT’s DSL-based service in Germany, the opening of an ISC in Berlin, and the launch of COLT’s 24th city network in Antwerp, Belgium. In October, the company launched DSL-based service in the Netherlands, added an ISC in Vienna, Austria, and launched its 25th city network in Stockholm, Sweden. In November COLT opened its tenth ISC—and the third in four weeks—in Zurich, Switzerland. The company also launched city networks in Birmingham, England, and Dublin, Ireland, before the end of the year, giving COLT high bandwidth fiber-optic networks in 27 cities in 11 countries.

Key Dates:

1992:: COLT is formed in London, England, by the U.S. mutual fund and investment company Fidelity Investments.
1995:: COLT is granted a U.K. Telecommunications Operators license, allowing it to expand beyond London. A telecommunications license for Frankfurt, Germany, allows COLT to expand into Europe.
1996:: COLT Telecom GmbH is established in Frankfurt, Germany, and COLT France is awarded a license to operate in Paris. COLT Telecom Group plc becomes a public company, with stock trading on the London Stock Exchange in the United Kingdom and NASDAQ in the United States.
1998:: COLT makes two important acquisitions: France’s leading independent corporate Internet service provider (ISP)ImagiNet, and Telecom Noord West N.V. in Amsterdam, which is renamed COLT Telecom N.V.
1999:: Peter Manning joins COLT as chief operating officer.
2001:: Peter Manning is named president and CEO of COLT.

With COLT quickly and successfully deploying fiber-optic networks and establishing Internet Solution Centres in leading cities throughout Western Europe, the company was carrying out its plan to provide an IP-based European network that linked Europe’s major business buildings into an effective single local area network across Europe. It also planned to launch DSL-based services in nine European countries. COLT had signed supplier agreements with Siemens, Alcatel, and Convergys for the necessary equipment and support services. The DSL-based services would complement COLT’s already significant local fiber access services. The company’s vision was to become the leading content delivery network in Europe, and COLT appeared able to raise the funds to finance that vision and execute its plans.

Principal Subsidiaries

COLT Telecom GmbH (Germany); COLT France; COLT Telecom N.V. (Netherlands).

Principal Competitors

British Telecommunications pic; Cable & Wireless pic; Energis pic; Deutsche Telekom AG; WorldComm, Inc.; KPN Telecom Broadcast (Netherlands); France Telecom.