AT&T Bails out Northpoint
  03/23/2001 8:56:57 AM MST Albuquerque, Nm
  By Dustin D. Brand; Owner AMO

AT&T Buys Northpoint for $135 Million   AT&T HAS AGREED to acquire the assets of NorthPoint Communications Group, the bankrupt DSL service provider, for approximately $135 million, the companies announced Thursday.

  AT&T will acquire all of NorthPoint's collocation facilities nationwide as well as equipment, software, and two leased buildings in Emeryville, Calif. The U.S. Bankruptcy Court approved the deal Thursday, said an AT&T spokesman. NorthPoint operates DSL-based local networks in 109 metropolitan areas. Other regulatory approvals may take another 60 days to complete.

  The purchase moves AT&T closer to offering its own DSL services without having to build a system from scratch. AT&T does not currently offer DSL, but stated its intent to enter the market when it revealed that the company would spin off tracking stocks for its consumer and broadband divisions, said Mark Siegel, a spokesman for AT&T's consumer unit.

  "When we announced a consumer tracker, we said DSL would be a big part of it," Siegel said. "We view DSL differently than our competitors do. It's primarily billed as a way to get high-speed Internet access, but it can also carry local phone service, long-distance service, and other services. It could be the conduit for multiple revenue streams."

  While NorthPoint's client base consisted of businesses, AT&T intends to target consumers with the new assets, Siegel said. AT&T hopes to offer its own branded DSL services by year's end, he added.

  NorthPoint will take steps to conserve cash until the asset sale is complete -- steps that may include staff reductions and termination of services to customers, according to a NorthPoint statement on Thursday. The company will continue trying to liquidate other assets not included in the sale to AT&T, according to the statement.

  NorthPoint sought protection under Chapter 11 of the U.S. bankruptcy law in January after a planned takeover by Verizon fell through, leading to a shortfall in funding for NorthPoint. Verizon dropped out of the deal because of what it said were declining business and financial conditions for NorthPoint.

  NorthPoint later sued Verizon, alleging violation of the terms of that takeover agreement.

  Northpoint is amongst many different DSL providers whom their stock prices fell below 2 dollars. Falling below $1 and remaining there ultimately means the stock is pulled from trading because of strict market rules. In the case of Northpoint, since they filed Chapter 11 protection the stock was pulled from trading. It is unclear whether AT&T can at this point revive Northpoint, but it is curious that they are investing in a pre-built DSL Backbone considering their overwhelming interest in Cable Internet Access.