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KPNQwest funding deadline looms

Administrators give KPNQwest customers until midday on Tuesday to attempt to keep Europe's largest fibre-optic network running - but analysts advise caution before companies pay their bills

The network of bankrupt KPNQwest received a one-day reprieve on Monday, as administrators extended their deadline for receiving cash to keep the operation running. Customers now have until midday on Tuesday to pay their bills, which may or may not keep Europe's largest fibre-optic network alive for a bit longer. Whether the network shuts down or not, the company itself is finished, according to industry observers, leaving Colt Telecom as the only remaining pan-European alternative provider. KPNQwest runs Europe's largest fibre-optic network, carrying one-quarter of the region's IP traffic, and providing services for companies such as Dell, Hewlett-Packard and Nokia. Customers have been asked to pay upfront for the next month, to provide funds for a skeleton staff to keep the KPNQwest network running for that time. Bert Siebrand, senior analyst, of technology and telecoms at SNS Securities, branded the move a game of "bluff poker" by the administrators. The administrators have now extended the deadline, saying they will announce the fund-raising results at around midday on Tuesday. Siebrand advised caution. "I would say to customers, take it one day at a time," rather than pay up, he said. The administrators have not specified how much money they require to be pledged, though the network costs an estimated 500,000 euros (£324,000) a day to run, so the company must require at least 15m euros for the month. On top of this, however, the company has financial responsibilities -- including payouts to redundant staff. If customers don't put up enough to keep the network going, then they may lose the money they put in. "It's an interesting exercise in game theory," said Siebrand. KPN may hold the key, as its debts to KPNQwest are reportedly large, and it might face the flak if a shutdown affected a big customer such as an airline e-commerce site. KPN has several customers that use KPNQwest bandwidth -- it has reportedly signed a deal to hand those over to Colt Telecom, the one remaining pan-European alternative service provider. Siebrand and other analysts said that KPNQwest's actions should face a formal investigation as they may have involved financial fraud.


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