KPNQwest files for bankruptcy as talks fail

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The Dutch group KPNQwest yesterday became the latest victim of the telecoms sector shake-out after failed attempts to sell off assets forced it to file for bankruptcy.

The company, which operates one of Europe's largest fibre optic networks, insisted that it remained in talks to try to sell a "substantial part" of the business and thought it might still be possible to eventually strike a deal.

But KPNQwest said its failure to sell off assets had left it with "no other choice" than to file for bankruptcy, after last week filing for court protection. It warned yesterday that it believed there was a "substantial" risk that there might be "no underlying value to either its debt or equity securities".

In two years the company's share price has collapsed from ¤89.40 to ¤0.30.

"The efforts to try to sell certain non-critical assets in order to secure sufficient cash proceeds to meet the ongoing obligations of the company have not been successful. This situation is not expected to change over the next 24 hours," it said yesterday.

Several of its subsidiaries across Europe will also file for protection in their local jurisdictions, with the exception of its Central European, Portuguese and Italian businesses "among others".

The collapse, the latest in a string of telecoms disasters, left telecoms companies across Europe, including BT and Colt Telecom in the UK, scrambling to pick up new customers from the Dutch company.

"Customers will be leaving in droves because they've basically already had advice to sort out contingency plans," Moreten Singleton, an analyst at Williams de Broe, said. "It's a field day for all the competing players to KPNQwest."

The Dutch company, which was set up by Dutch KPN and US-based Qwest in 1999, advised its customers on Thursday to put contingency plans in place with other providers after failing to find a buyer.

It is thought that AT&T of the US is still mulling making an offer for some of the company's assets with other names in the frame including Verizon, Infonet and Level 3.

KPN, which owns 40 per cent of KPNQwest, said it had already signed a deal with Colt Telecom to transfer some of its KPNQwest business to the UK operator. Shares in Colt closed up 6.5 per cent yesterday at 49p.

"The company [KPNQwest] is dead and buried," one analyst said. "If KPN is doing other deals, including a large one with Colt, then everyone's going to be going."

While a spokesman for Colt confirmed a deal had been signed, he said it did not cover all the business KPN had conducted with KPNQwest. "They [KPN] have given us a contract for a number of services but it's not all the business they do with KPNQwest. We have got a part of it but not all of it," he said.

KPNQwest, headed by Jack McMaster, said it was working with its customers to "facilitate the implementation of contingency plans, should the current situation result in instability or a total shut-down" of its network.