Alcatel, 360networks forge deal

Alcatel SA and 360networks Inc. late last month announced a deal, valued at US$1 billion, that calls for Alcatel to purchase 360networks stock and sell the cable infrastructure provider equipment for undersea cable projects.

French telecommunications equipment maker Alcatel said it would buy US$1 billion of 360networks stock in two installments. Effective immediately, Alcatel will purchase US$700 million worth of 360networks shares and then buy another US$300 million in 2012. The second round of the stock purchase will occur following the signing of a contract for a transatlantic submarine cable and the purchase of a minimum US$100 million of Alcatel terrestrial products by 360networks for the transatlantic project.

Vancouver-based 360networks plans to build an underwater cable, dubbed 360atlantic2, that should be ready for service by 2002. The extra US$300 million in funding from Alcatel in the stock purchase deal hinges on 360networks choosing Alcatel as an equipment supplier for this project.

360networks also said it plans to build a 22,000-km, six-fibre pair, 4.8 terabit per second submarine cable that will connect the U.S., Canada and Japan. Alcatel will help with the development of this project, called 360pacific, by helping with the network design in addition to the supply and installation of submarine transmission and protection equipment. 360networks said it will purchase US$1.1 billion in cable, repeaters and terminal equipment from Alcatel for this project.

The two vendors will also form a joint technical advisory group that will have two executives from both companies addressing ways to further 360networks’ use of Alcatel’s products.

Alcatel and 360networks are currently working together on a network joining North and South America. In October, the companies completed the first part of this project by linking a segment between the U.S. and Brazil.