Fate of Exodus Canada unchanged after buyout

Debt-laden Exodus Communications received its last rites late last week when U.K.-based Cable & Wireless PLC, a telecommunications company focused on data services and Internet Protocols, bought the former Web hosting giant for a cool US$850million. The move all but guarantees that Exodus’ Brampton, Ont., hosting facility will not be salvaged.

With the sale, there was a slight glimmer of hope that Exodus Internet Canada Inc.’s Ontario data-hosting centre could be saved despite earlier confirmation of its closure, slated for early 2002.

“Our geography focus is on the U.S., Europe and Japan. It’s (Canada) not seen as a market we wish to focus on at the moment,” said Peter Eustace, a spokesperson for Cable & Wireless in London.

Under the terms of the purchase agreement, Cable & Wireless will assume US$150 million in debt and assets that include 26 of Exodus’ 44 operational data centres and four fully functional centres. In total, 26 are in the U.S., two in London and one in both Frankfurt and Tokyo. Eustace said there were no immediate plans to acquire any assets in Canada.

As for Big Blue, it has already begun to reap the benefits from its rival’s demise.

“We’ve been contacted by a number of customers both with Exodus and customers looking for new hosting opportunities. We expect to see (more) customers come forward,” said Paul Lovell, general manager e-business hosting services for IBM Canada Ltd. in Toronto.

Exodus was considered by many, including IBM, to be one of the market leaders in the Web hosting business. “Exodus was identified by a number of consultants as one of the leaders in the Web hosting industry on a global level,” Lovell said.

With centres located throughout Europe, U.S., Canada and Asia, Exodus’ fall was due mainly to economics, according to its rival. “They had a business model that required them to grow very quickly in the marketplace and as a result they had to invest significant capital dollars in order to fund their expansion. The return on those capital dollars weren’t sustainable,” he added.

Cable & Wireless PLC in London can be reached at http://www.cw.com

IBM in Markham, Ont., can be reached at http://www.ibm.com/ca

Exodus in Brampton, Ont., can be reached at http://www.exoduscommunications.ca