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Infonet Signs 3-Year Licensing Deal With Deutsche Telekom

May 10, 2000|From Bloomberg News

Infonet Services Corp., an El Segundo-based provider of Internet access to businesses, agreed Wednesday to allow Deutsche Telekom to resell its services worldwide for three years.

The agreement could generate about $1 billion in revenue for Infonet if Deutsche Telekom opts for two one-year renewals at the end of the initial three years.

The first three years will generate $350 million in revenue, said Infonet Chairman and Chief Executive Jose Callazo.

The deal gives Europe's largest phone company access to Infonet's data and network services, including messaging. Deutsche Telekom will sell the services under its own brand and as part of customized packages.

Infonet said it supplies data communications to more than 2,600 companies and has 2 million remote-access customers.

Separately, Infonet expects to report that revenue for its fiscal year ended March 31 rose 58% to $480 million, and that earnings before interest, taxes, depreciation and amortization expenses, or EBITDA, rose 46% to $30 million, said spokesman Morgan Molthrop. Analysts had expected the company to have EBITDA of $24 million to $25 million.

"This is a hugely positive announcement out of Infonet," said ABN Amro analyst Kevin Roe, who reiterated his "buy" rating on the stock. Roe had expected Infonet to have $151 million in revenue and EBITDA of $12 million for the fourth quarter.

Infonet shares fell 6 cents to close at $16 on the New York Stock Exchange. They've declined about 24% since the company sold shares to the public in December at $21 each.

Deutsche Telekom's American depositary receipts fell $3.88 to close at $56.88 on the NYSE amid concern that European phone companies are paying too much for the next generation of wireless licenses.

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