Call Net Enterpris (NASDAQ:CNEZF)
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Call-Net to acquire business customer base and certain network
facilities of 360networks in Ontario, Quebec and Atlantic Canada, from Bell
Canada
Call-Net to hold conference call at 3:00 p.m. to discuss today's announcement
TORONTO, May 26 /PRNewswire-FirstCall/ -- Call-Net Enterprises Inc. today
announced that it has entered into an agreement with Bell Canada to acquire
certain assets of 360networks Corporation including significant portions of its
business customer base and specific network facilities in Ontario, Quebec and
Atlantic Canada.
"We are very pleased to enter into an agreement with Bell Canada to acquire
360networks' business assets in Eastern Canada," said Bill Linton, president
and chief executive officer of Call-Net Enterprises. "On closing, this
transaction will greatly increase our business customer base and will allow us
to more rapidly and cost-effectively expand our local, fibre and IP networks in
Eastern Canada, further reducing our reliance on leased facilities. This
transaction supports our strategy of providing unique telecom services to the
small and medium size enterprise segment and increases our effectiveness and
cost structure in offering services to multi-national customers in partnership
with Sprint."
The transaction is conditional on Bell Canada's acquisition of the Canadian
assets of 360networks Corporation and certain related U.S. interconnect assets,
announced earlier today. In its announcement, Bell Canada stated that it
intends to retain 360networks' facilities and customer base in Western Canada
and will sell significant portions of 360networks' business customer base in
Eastern Canada to Call-Net. Call-Net will enter into a two-year transitional
services agreement with Bell to provide technical and operational services to
the newly acquired customer base and in exchange be paid approximately 70 per
cent of the total retail revenue.
Call-Net's acquisition price for the business customer base represents
approximately three months of acquired revenue and will be paid over the term
of the agreement. The 360networks business customer base in Eastern Canada is
expected to add in excess of $50 million to Sprint Canada's total business
revenue. Earnings before interest, taxes, depreciation and amortization of the
acquired customer base is expected to be comparable in margin to Call-Net's
existing business. Call-Net will have an option at the end of the term of the
agreement to acquire certain assets used to service these customers.
"The transaction is financially attractive and will further solidify our
position as a competitive alternative telecommunications provider to business
and residential customers," added Linton. "It strengthens the mix of local and
data business revenue, provides us with the opportunity to acquire certain
network facilities at a significantly reduced capital cost, gives us access to
1,000 office buildings in Ontario, Quebec and Atlantic Canada and certain
rights to consider acquiring additional local facilities in this territory."
Call-Net's transaction is expected to close by September 2004 concurrent with
the finalization of Bell Canada's acquisition of 360networks and is subject to
customary terms and conditions including due diligence, the completion of
mutually satisfactory definitive agreements, board and regulatory approvals.
Conference call at 3:00 p.m. today
Call-Net will hold a conference call for all interested parties at 3:00 p.m.
(ET) today to discuss this matter. To participate in the conference call dial
416-695-6140 or 1-877-667-7774 (Participation code: T501237S), or join via
audio Web cast at http://www.callnet.ca/. Replay will be available at
416-695-5275 or 1-888-509-0082 until June 2, 2004. The audio webcast will be
archived at http://www.callnet.ca/
About Call-Net Enterprises Inc.
Call-Net Enterprises Inc., (TSX: FON, FON.B) primarily through its wholly owned
subsidiary Sprint Canada Inc., is a leading Canadian integrated communications
solutions provider of home phone, wireless, long distance and IP services to
households, and local, long distance, toll free, enhanced voice, data and IP
services to businesses across Canada. Call-Net, headquartered in Toronto, owns
and operates an extensive national fibre network, has over 148 co-locations in
five major urban areas including 31 municipalities and maintains network
facilities in the United States and the United Kingdom. For more information,
visit http://www.callnet.ca/ and http://www.sprint.ca/.
Note for Investors:
This news release may include statements about expected future events and/or
financial results that are forward-looking in nature and subject to risks and
uncertainties. For those statements, we claim the protection of the safe
harbour for forward-looking statements provisions contained in the Private
Securities Litigation Reform Act of 1995. The Company cautions that actual
performance will be affected by a number of factors, many of which are beyond
its control. Future events and results may vary substantially from what the
company currently foresees. Discussion of the various factors that may affect
future results is contained in the company's recent filings with the Securities
and Exchange Commission, the Ontario Securities Commission and SEDAR.
DATASOURCE: Call-Net Enterprises Inc.
CONTACT: Media Contact: Karen O'Leary, Corporate Communications,
(416) 718-6445