KPNQwest debt may sink company

ITworld.com |  Networking

Customers of KPNQwest NV should make contingency plans in case the company's recent warnings about its deteriorating financial position prove to be well founded and cause it to be broken up and the parts sold off, according to research company Gartner Inc.

"Existing and potential customers of KPNQwest must assume that there is a mid- to high-degree of risk that the ownership position, network coverage or services will change if KPNQwest doesn't get new funding," the research company said in a report issued Tuesday. "They should look for a potential alternative provider, but should not jump ship just yet."

Last week, KPNQwest, a pan-European data communications and hosting company, warned that it would not be able to meet its cash needs for 2002 unless it wins new funding. It said it is exploring options for financing with bankers. Of its two main shareholders, KPN NV has its own debt problems and Qwest Communications International Inc. has said it does not feel obligated to fund KPNQwest, Gartner said.

AT&T Corp. and Sprint Corp. might have interest in buying some of KPNQwest's assets, but European telecommunication providers are less interested and Gartner does not expect any Asian interest, the research company said.

KPNQwest can survive if its debt -- estimated at

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