KPNQwest kept afloat until end of the month

12 June 2002 Bankrupt telecoms operator KPNQwest has secured enough additional funding to keep its networks running till 1 July. This follows an urgent appeal from the company asking for customers to quickly settle outstanding bills for May and June – or risk losing their Internet connections.

KPNQwest reportedly needed about €30 million to keep its network operational. The breathing space will enable the company to continue asset sales discussions. BT and Cable and Wireless are both rumoured to be interested in buying KPNQwest assets.

KPNQwest filed for bankruptcy in May 2002 after falling demand for bandwidth left it unable to service its debt.

Founded in 1998 as a joint venture between Dutch national telecoms operator KPN and America’s Qwest Communications, KPNQwest is said to be owed more than €50 million in outstanding bills. The company claims that KPN, its largest customer, owes it €23 million in unpaid bills. KPN has agreed to an independent audit of KPNQwest’s accounts to determine exactly how much is owed.

The rescue finance raised this week comes largely from KPN, which has substantially increased the amount it was originally prepared to pay to help bail out KPNQwest. It was reported that KPN was only willing to pay €4 million, but KPNQwest’s trustees threatened that if KPN did not provide more money it would be disconnected from the KPNQwest network – with disastrous consequences for KPN.

If the plug had been pulled on KPN, it would have left customers such as Heineken without an Internet connection. KPN has also signed an agreement with Infonet Services, a US-Dutch communications company, to provide alternative services for KPN’s customers who use KPNQwest’s Internet-based voice services.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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