KPNQwest bankruptcy filing sends shares plunging 71%

AT&T, The US telecoms giant, is the most likely buyer for the assets of bankrupt telecoms group KPNQwest, it was confirmed yesterday, as the Dutch company's shares plunged 71 per cent.

The market was reacting to Friday's bankruptcy filing by KPNQwest, which claimed yesterday that there were other interested buyers as well as AT&T. Previous attempts to sell the business to the US telecoms group had failed and KPNQwest's assets will now be offered in a firesale.

The bankruptcy, which has sent shockwaves through the sector, came after last-minute talks to raise short-term funds came to nothing.

"There are several potential buyers, but AT&T is the most likely one," said Koen van Zijl, a KPNQwest spokesman. He added that AT&T has a team conducting due diligence at the company's headquarters in the Netherlands.

AT&T had previously declined to comment on whether it was interested in buying any part of KPNQwest, which operates Europe's largest fibreoptic data network that spans 18 countries. Analysts estimate that the assets could fetch €200m to €250m (£128m-£160m) – 10 per cent of the cost of building its 25,000-kilometre network.

Investors and customers have been shocked by the speed of the company's demise. Just two years ago the business, which was founded in 1999 by Dutch incumbent telecoms operator KPN and US carrier Qwest, had a stock market value of €42bn. By yesterday's close, KPNQwest shares were down 71 per cent at €0.09, valuing the company at only €5m.

The French newspaper Les Echos reported that telecoms equipment maker Alcatel could lose about€100m from KPNQwest's bankruptcy.

"What has happened is unbelievable," said Philip Scholte, a telecoms analyst at Stroeve brokerage in Amsterdam. "It's difficult for me to accept that business has deteriorated this badly in only a couple of months."

Many thought that KPNQwest could survive the capacity glut and falling demand for data transfer services after the tech bubble burst. Its biggest shareholders, KPN and Qwest, were, however, unwilling to continue to provide funding.

The company's customers are now scrambling to find other suppliers. KPNQwest is Europe's largest internet network operator and its 100,000 corporate clients, which include many internet service providers, rely on its system to carry their data traffic. Other European telecoms companies, including BT and Colt Telecom in the UK, will be looking to pick up many of these customers.

Talks to sell KPNQwest are complicated by the fact that some of its country divisions will be liquidated separately. Others including Central European, Italian and Portuguese subsidiaries, have decided not to seek protection. Its Ger- man unit yesterday declared bankruptcy.