TECOM invests €120 million in European network operator

Interoute investment gives the rumoured second UAE operator a significant international footprint.

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By  Alex Ritman Published  October 31, 2005

The Dubai Technology, E-Commerce and Media Free Zone (TECOM) has announced a €120 million (US$144 million) investment in Interoute, a pan-European voice and data network operator. Coming just weeks after rumours circulated that TECOM would be announced as the UAE’s second operator, the deal diminishes any further possible speculation, giving the company connectivity across European and North American markets. Part of Dubai Holding, TECOM will receive a significant minority share in Interoute in return for the investment. TECOM currently provides communications services to the corporates in Dubai’s free zones, and sources have revealed that it will be imminently confirmed as the strategic investor behind the UAE’s second all-licence operator. Using technology from Chinese vendor ZTE, TECOM is reportedly trialling a GSM/UMTS network. TECOM has also recruited contractors to build a multi-million dollar facility in Jebel Ali linking to the Falcon System, a high-speed submarine network that FLAG Telecom is planning to launch later this year. These two activities, coupled with the investment in Interoute make a compelling case that TECOM is indeed lined up to become the second operator in the UAE. Last week Interoute acquired Via Networks and the PSINet Europe assets, giving the combined company a customer base of 19,000 corporates, every European incumbent and the largest North American and Asian carriers. According to Interoute’s Dutch country director Berend Jan van Manen, Interoute wants to grow in the west, while Tecom wants to grow in the east, so the partnership will allow the two to help each other with their expansion plans. Even before TECOM becomes an official UAE operator it is already charting an international path. Aside from this deal with Interoute, it is already lined up to be among the bidders for a 35% stake in Tunisian incumbent, Tunisie.

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