Carriers unite to keep KPNQwest network alive

Several telecommunications companies have provided funds to keep a key part of bankrupt KPNQwest network running until at least 1...

Several telecommunications companies have provided funds to keep a key part of bankrupt KPNQwest network running until at least 1 July.

The carriers, which are all users of KPNQwest's 18-country, 25,000km fibre-optic network, have set up a foundation to support their efforts called Customer Support KPNQwest.

KPNQwest's liquidators have approved the foundation and sufficient funds have been pledged to maintain a key part of the network in the northwest of Europe until 1 July, KPN said.

This should give customers additional time to find an alternative service provider and provide KPNQwest's liquidators with a chance to sell a business that is still operational.

KPNQwest's liquidators earlier this month raised money from customers and said they could keep the network running until 1 July, as long as its suppliers co-operated and did not demand payment of bills. However, some suppliers, which include electricity companies and hardware vendors, demanded cash, and banks held on to the funds paid by customers to keep the light on at KNPQwest, leading to uncertainty about the company's status.

On Friday (21 June), the liquidators, after losing a court case against the lending banks, told staff at KPNQwest to stop working and said the network would be shutdown. The funding move by the group of telecommunications companies seems to have prevented that closure. The banks, meanwhile, have said they suspect fraud at KPNQwest and have asked for an investigation.

Negotiations to sell the KPNQwest network are continuing. Experts say the network is Europe's largest, carrying more than 25% of the continent's Internet traffic.

KPNQwest went bankrupt in late May after a plan to sell assets to meet urgent financial obligations failed.

The company, founded in November 1998 by KPN and US-based Qwest Communications, invested heavily in its network and won large customers including Microsoft and Dell. The company, once valued at £26bn, collapsed when demand failed to meet expectations and its founders and banks withdrew support.

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