PSINet Extends September Buying Spree

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HERNDON, VA - Late last month PSINet bought its sixth Brazilian ISP in the last five months to solidify its position in Latin America, where it has companies in Brazil, Argentina, Chile, Panama and Mexico.


"Most of future Internet growth will come from Latin America," PSINet spokesman Reid Walker said, "with Europe following close behind. Countries like Brazil are already exploding."


The number of people on line in Latin America, he added, "is not extraordinary as yet but the percentage of growth is very high. We're also looking at deregulation which will bring down the cost of phone lines.


"Cost is a major issue. It is high for corporations and individuals so we are not seeing a lot of corporate use as yet, but it is evolving quickly so we are looking for ISPs all through different regions."


PSINet is a large independent commercial Internet service provider active in 20 countries outside the U.S., including major European markets, Canada, Japan and Korea.


The company is on a buying spree, having acquired companies in Hungary, Spain, Canada, Hong Kong and Brazil in the last two weeks of September alone. In August it acquired ISPs in Panama and Brazil.


"All the Brazilian ISPs we bought have dedicated dial up connectivity, a strong understanding of their regional markets and a good customer base. Our ultimate goal is to create a well-known brand throughout the region.


"We won't cannibalize a well-established brand, but we do want to pull customers into our global network, and at this point we are considering our options in those regions.


"Each one of these companies are cash flow positive so that they benefit our bottom line, but we bought them because the potential down there is so extraordinary. As they roll out all the services we can offer and become more comfortable and ubiquitous, usage and numbers will go up."


The company's strategy in Brazil is to build a network that covers the whole country. Acquisition of TBA Internet, for example, gives the American firm access to the largest ISP in the capital of Brasilia.


"This acquisition adds a key region to our operations, and opens the opportunity for further growth in Central Brazil," said Philippe Kuperman, president of PSINet Latin America.


ServNet, another company acquired last month, is located in Salvador, the largest city in the state of Bahia, and gives PSINet access to northern Brazil for the first time. The company is now the third largest ISP in Brazil.


PSINet has been the largest independent ISP in Canada since acquisition of iSTAR and Interlog Internet Services last year, a position it bolstered last month through purchase of Montreal-based TotalNet.


Strategy, he added, was to become the # 1 to 3 ISP in the top 20 telco markets.


He noted that more than 50 percent of corporate revenues already come from overseas, mostly from Europe and Asia, "but Latin America will play a role."
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