FRANKFURT (Dow Jones)--Ten European glass fiber network operators will combine their infrastructure in an alliance called euro-one, Barry Nolan, chief operating officer of Frankfurt-based provider euNetworks, told Dow Jones Newswires in an interview.

The move will create one of the longest networks of this kind worldwide, Nolan said. EuNetworks, the European subsidiary of Global Voice Group Ltd. (H23.SG), initiated the bundling of networks into euro-one.

Euro-one will establish a continuous high-speed connection with a total length of 85,000 kilometers between Eastern Europe and North America, given that one of the partners, Ireland's Hibernia Atlantic, provides connections to the US and Canada.

Other companies involved in the project are Ireland's e/net, Poland's Exatel, Swiss Fibrelac, Hutchison Whampoa Ltd.'s (HUWHY) U.K. subsidiary Geo, Spain's Jazztel (JAZ.MC), the Czech Republic's Net4Net, French Neo Telecoms and Italy's Retelit (LIT.MI).

The new alliance, which will be officially announced later this week, comprises around a dozen European countries, including all major Western European economies. In addition, it integrates the Eastern European countries Poland and the Czech Republic. More than 350 cities are connected to the transatlantic network.

The project will also involve a common sales strategy for all partners, whose customers, including big enterprises and other telecommunications providers, will be able to benefit from consistent services and standardized invoicing.

EuNetworks alone has a glass fiber network of 6,600 kilometers and offers both long-distance connections between Germany, the U.K., France, Belgium and the Netherlands, and city networks in 15 large cities.

The demand for such fast and secure connections has risen in recent years, particularly with the internet. In addition, financial services providers like Deutsche Boerse (DB1.XE), which made an agreement with euNetworks in May, need increasingly large capacities.

The euro-one partners exclusively concentrate on the business customer segment, competing both with large telecommunications companies such as Colt (COLT.LN) or MCI and regional providers such as newly listed German Versatel (VTW.XE). Former monopolists like France Telecom (FTE.FR) or Deutsche Telekom (DT), on the other hand, are concentrating mainly on the retail business segment.

Many glass fibber networks were built in Europe at the end of the 1990s, costing billions. However, many of them weren't used to full capacity and were, therefore, unprofitable. In 2006, the U.S. provider Viatel (VTLAF) sold half of its European network for a fraction of the costs to euNetworks. According to experts the market is still characterized by overcapacity.

Ever-growing amounts of data are, however, leading to a better network capacity utilization, says Sal. Oppenheim analyst Frank Rothauge. This is what interests network providers, who have very low running expenses, he adds. Activities in areas with low competition, such as Eastern Europe, are particularly lucrative, he says.

EuNetworks hopes to expand its business in those areas by entering into partnerships, Barry Nolan said. He predicted a dynamic development of the whole market in the coming years. He added that Verizon (VZ) has announced further investments in Europe.

Within the next two or three years, Nolan said, euNetworks aims to reach sales of over EUR100 million. In 2006 the company increased its sales by 48% to EUR24 million and reached earnings before interest, taxes, depreciation and amortization of EUR7 million. In 2005 Ebitda was EUR2 million.

Company Web site: http://www.eunetworks.com

-By Stefan Paul Mechnig, Dow Jones Newswires, +49

This may turn out to be the "Saviour" in the basket... 

DJ MARKET TALK: Global Voice +2.6%; May Rise To S$0.30 - Phillip

0330 GMT (Dow Jones) STOCK CALL: Global Voice (H23.SG) may revisit multi-year high of S$0.30 as loss-making fibre-optic network operator may turn around in near term after rolling out new products, expanding client base over past year, says Phillip Securities. Stock now +2.6% at S$0.20 in thin trade. Since acquiring almost 50% stake in Viatel Holdings' pan-Europe network last June, Global Voice able to offer cross-border solutions to both consumer, corporate sectors; has since attracted new clients, strategic investors like JP Morgan, Legg Mason, ABN Amro. Phillip adds proposed share buyback (in-principle approval from SGX secured in April) should boost stock over long term. FY06 net loss at EUR4 million.(FKH)

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