AT&T and its cable partners, which rely on Excite@Home for their broadband service, were given the news yesterday, without the expected 30 day notice period.
A spokeswoman for Excite@Home said the step was taken to conserve cash.
She said: ‘Adding new subscribers entails incremental capital-cost outlays, which directly affects the company’s cash flow during the U.S. bankruptcy process.’
Excite@Home filed for Chapter 11 bankruptcy protection at the start of October following a month of reported financial problems and the sacking of its auditor Ernst & Young, replaced by PricewaterhouseCoopers. Excite@Home’s debts are reported to be around $1bn (Pounds 689bn).
AT&T is currently awaiting bankruptcy court approval for its $307m (Pounds 211m)purchase of Excite@Home broadband internet access business related services. The telecom already owns a 23% stake in the ISP.
But the decision to freeze new customer sign-ups has thrown AT&T into temporary disarray, and it is not expected to be able to add new cable customers or upgrade existing ones until 3 November.
According to one source close to the company, the decision was tactical in nature and aimed at forcing AT&T to up the bidding price for Excite@Home’s broadband network.
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