Colt said it placed 14.625 million shares at 2,735p to raise pounds 400m. It also placed a seven-year debt offering worth 368m euros (pounds 231m) through convertible notes that will carry a share alternative.
Colt stock rallied 5.2 per cent to 2,849p, valuing the company - although it has not made a profit - at more than pounds 18bn. Colt stock has tripled in the past three years after increasing almost six-fold in 1998.
"We are seeing unprecedented growth in the European market for data transmission, Internet and other high bandwidth applications," said Jim Curvey, Colt chairman. Colt plans to launch DSL services by the end of next year, beginning in Britain, Germany, France and the Netherlands.
High-speed DSL technology should enable Colt to build market share among small and medium-sized businesses, which have been unable to afford the high-speed data networks operated by large corporations. Typically, Colt builds a fibre optic link from its network directly into a firm's premises.
Colt also plans to expand its Web-hosting infrastructure, which runs and manages corporate websites. It expects to launch six dedicated Web hosting centres by mid-2000 and may double that by the year end.
Analysts expect the European market for Web hosting to reach pounds 1.8bn by the end of 2000, up from pounds 300m this year. Web hosting is a major growth area for telecoms operators, notably Cable & Wireless, which is spending heavily to beef up its US-based facilities.
Colt also confirmed it is continuing with a network infrastructure project to link cities from Belgium to Italy. A 3,000-mile network in northern Europe is expected to be completed in the second half of next year, with the southern section completed by year-end.
"The further expansion of our local and inter-city infrastructure will give the end-to-end network control needed to further enhance Colt's leadership position in high bandwidth connectivity," Mr Curvey said.