UPDATE: 360networks acquires U.S.-based telecom business

Vancouver-based 360networks Corp. on Monday announced the acquisition of Houston-based Dynegy Inc.’s communications business, just 21 months after the Canadian fibre company filed for bankruptcy.

David Byford, director of corporate communications for Dynegy in Houston, said the company has exited from the communications business due to poor results and it expects to reconstruct itself around its core energy businesses.

“We entered the business because it was our belief that a strong North American market for bandwidth would occur. This never fully met our expectations,” Byford said.

Chris Mueller, spokesperson for 360networks in Seattle, said Dynegy has spent close to $1 billion dollars on U.S. assets, but is now trying to cut its telecom ties, which makes for good bargain shopping for 360networks.

“We are buying them for a fraction…sincerely a fraction off the replacement cost. And that is giving us route diversity, metro access. It’s giving us inventory (and) it’s giving us nearly 50 carrier customers,” Mueller said.

He added that the acquisition will give 360networks deeper access within 10 American cities: Boston, Washington, Atlanta, Miami, Chicago, Dallas, Denver, San Francisco, Los Angeles, and Houston.

He said 360networks acquisition of Dynegy should appear seamless to customers, but the purchase will not mean business as usual for Dynegy’s Denver employees.

“We have a presence in Denver. We will continue to operate their network. We will manage their network with our people, and the Dynegy employees know that,” Mueller said. “Essentially, us buying their network means that they are out of work…our people will begin operating their network at the close of the transaction.”

Elroy Jopling, a Toronto-based analyst with Gartner Inc., said this acquisition puts 360networks on the fast track to recovery, but noted that with every fast track there are speed bumps along the way.

“Are they in over their heads from a financial perspective? There’s a natural operation of taking and melding, rationalizing what they have through Dynegy with what (360networks) already have in the U.S.…and anytime you put two businesses together, it’s never an easy operation,” Jopling said.

The deal, which should close by the end of April, will give 360networks an additional 16,000 route miles of fibre-optics.

360networks can be found online at www.360.net.