Bell Canada Buys 360networks' Canadian Assets

SEATTLE, Wash., May 26 -- 360networks Corp., a provider of broadband telecommunications in North America, has agreed to sell its Canadian assets, primarily Group Telecom, to Bell Canada for $205 million in cash.

The purchase includes the assets of 360networks' subsidiary, GT Group Telecom Services Corp., and certain related US interconnect assets. Bell will retain 360networks' business, facilities and customer base in Western Canada, and will sell significant portions of the retail customer operations and certain network assets in Eastern Canada to Call-Net Enterprises Inc.

The transaction will give Bell an extensive fiber network that includes local facilities in Vancouver, Victoria, Calgary, Edmonton and other cities in Western Canada. The company will also gain access to almost 200 office buildings in Western Canada.

"This is a great transaction for 360networks," said Greg Maffei, the company's chairman and CEO. "We are very disappointed to be exiting Canada, however the opportunity to monetize our tax losses and eliminate our debt was compelling."

360networks said combined with cash on hand, the proceeds will eliminate its debt.

The company said it "has been taking advantage of the turmoil in the telecom market by adding synergistic, cash-flow positive assets at a fraction of their original construction cost and current replacement value." In addition to GT, in 2003 the company acquired Dynegy's telecom assets and Touch America (formerly Montana Power).

"Today there are fewer logical consolidation opportunities in Canada, but we do believe there are some interesting opportunities in the US," said Maffei.

After the GT deal closes, 360networks said it will focus on its US operations, "which include a low-cost, US long haul network footprint with good metro access and a Western US regional network with unique reach into rural markets."

Until then, its management structure and operating procedures will proceed as usual, the company said. After close of the transaction, the Canadian businesses of 360networks will continue to operate as a separate division, primarily under the name Group Telecom, at least until the end of 2005.

The deal, anticipated to close by September 2004, is subject to approval of the Canadian Competition Bureau.

For more information, visit: www.360.net