Struggling telco market claims Canadian victim
Canadian international telecom carrier Teleglobe has become the latest operator to file for bankruptcy protection suffering from the tough climate in the international communications market.
The filing came as part of a major reorganisation at the company which also said it would kill its hosting and data transmission services, and slash its workforce by nearly 50%.
According to the company, the moves will help free it from the high costs associated with recently built infrastructure built primarily for the now discontinued data and hosting operations.
Analysts see the drastic steps as an attempt to find a buyer for the international operation. ‘Going back to their core business is just a way to dress up the potential appeal to any suitor,’ said John O’Keefe, internet services analyst at CurrentAnalysis.
But even that may still not help Teleglobe find a buyer for its international network. ‘There are other companies out there looking to sell similar assets and not many people looking to buy,’ said O’Keefe.
Teleglobe’s reorganisation also means 850 jobs are to go, leaving around just 950 people at the company. US operations were the hardest hit with 50% of the job losses, while only 15% will come from Canada. The company would not say how many UK employees were set to go.
As for Teleglobe customers, Serge Fortin, Teleglobe’s newly appointed chief operating officer, said they will be notified over the next few days whether or not their Teleglobe services will be cancelled. Fortin also maintained that Teleglobe is in talks with a number of potential bidders.
To keep operating, Teleglobe is set to receive US$100 million of financing from BCE Inc, the Canadian telecom giant that paid $4.75bn in stock and cash to acquire Teleglobe two years ago.