By Husna Naujeer
Total Telecom, 3rd April 2001
HighSpeed Office Ltd. has raised £15 million, in a second round of financing, from Marconi and a consortium of landlords. The landlords are British Land, Canary Wharf, Legal and General, Morley Fund Management and Prudential. They now have just over 50% of HSO.
According to Paul Lufkin, director of financial advisers ARC Associates and HSO, discussions with various property owners on the deal started "last year." The adviser to the landlord consortium was Morgan Stanley. HSO was represented by ARC Associates.
HighSpeed Office was formed by ARC Associates in June 2000 to provide broadband services to small and medium-sized businesses in the U.K. and Europe. Marconi was brought in to manage the process of "lighting-up" the network in November.
All of the Consortium's properties are commercial, with 70% based in the South East of England and 35% in central London. At present, 85% of the Consortium's properties are occupied and 15% are development properties. Lufkin said he expects HSO to break even in three years' time. By then, the basic access services will have come down in price and this will enable companies to invest the savings into new services and distribution channels.
Commenting on the agreement, chief executive of HSO, Chris Butchers, said, "We will be installing the broadband infrastructure to offer a full range of services, including voice, high-speed data, security ... Although we have signed a preferred provider agreement, we will still be competing with other incumbents."
Like Butchers, Lufkin was keen to stress that "we don't want to restrict customer choice. The landlords will co-operate with us, but our aim is to increase choice." He said that once the infrastructure has been installed, service costs would be minimal.
In terms of future plans, Lufkin added, "We will [perhaps] look at retail and residential property. Large multi-tenanted office buildings are a guaranteed win-win for us. Once we have demonstrated success in that area, there will be other opportunities. But we don't want to take risks."
Reproduced from Total Telecom®
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