Sophia : Kast Telecom in a recovery package

In suspension of payments since early May, the operator from Sophia Antipolis has started a recovery package over twelve months. More than 30 employees have already been laid off in April.

A difficult period for the Kast Telecom, a telecommunication operation in Sophia Antipolis : in suspension of payments since early May, the company has been compelled to bankruptcy by the commercial Court of Grasse last May 14th with an observation period of 12 months. A trustee in bankruptcy, Marie-Claire Faivre-Duboz, has been entrusted to attend to company's interests and to freeze the debt. A recovery package is under analysis. It aims at recovering the balance by March-April 2002, without the necessity of new fund contributions. In the past, the company founded by Magdi Houry, already laid off 32 employees over a staff of 85 people in france (around fifteen lay-offs in Paris and the rest in Sophia Antipolis.Listing on the stock exchangeKast Telecom is ill since the beginning of the year. On the research park in Sophia where the company's offices are set, rumours were getting louder about unpaid providers and increasing financial difficulties. Founded in 1995, Kast said nevertheless last November, that they wanted to make forty digital loops over Europe. As every other telecommunication companies in the world, Kast has had to face several problems. The listing on the stock exchange, scheduled for the end of 2000, did not happen but of the marketplace behaviour and they rapidly ran out of funds.Another factor of destabilization : the failed merger with Axxon, a subsidiary of the Canadian group Highpoint. This merger was planned to happen in the beginning of last year. But Axxon, which would have allowed a deployment over northern europe, has already been put in compulsory liquidation. "As soon as December 2000, we were waiting for funds from new shareholders up to 500 million francs in order to keep on building the optical fiber network. But those people have quit, Jean-Yves Roux-Levrat, the executive officer, explains. Then we hoped that current shareholders would invest again. But amounts that have been announced did not arrived. So, on May 3rd, we stopped paying."A deep rebalancingthe continuance plan requires a deep rebalancing, perhaps even an change of activity. Kast Telecom is freezing all of its projects in terms of infrastructures building and deployment of optical fiber loops all over France and in Italy where the company is set up (the Italian subsidiary is facing serious difficulties). Kast Telecom re-focuses on telephony for SMEs (voice and data services) and go towards a hosting activity with new products that it should announce soon in the ASP field (Application Service Provider) and in virtual networks.We have built an ambitious plan in order to recover within nine months, Jean-Yves Roux-Levrat says. Of course we worry about this situation for our providers and customers. But, in front of new products on the market, we strongly hope to get out of it quickly."But if we compare with ambitions claimed only six months ago, they have completely changed their mind. Kast, which was one of the three operators selected for building the local network in Sophia Antipolis with Completel and Bouygues, declared they had great ambitions on the European scale. The operator expected a turnover of 500 million francs in 2001, half of which generated in France with 23 local loops. It was announced that the European staff would reach 400 people in France. Today, they have revise their ambitions downwards and the point is even to survive…