Interoute

aIntroduction to Interoute

Interoute is the only next generation network covering the majority of the European Union, from London to Warsaw, from Stockholm to Sicily, with transatlantic capacity linked to North America's major telecoms hub. The Company is key to Europe’s Digital Supply Chain, serving more than 12,000 customers and supporting €1 billion of eCommerce transactions daily through its data centres alone.

	Interoute, the power behind European broadband

             
Completed only in mid-2002, Interoute was expanded through the acquisition of GTS/Ebone’s metropolitan fibre assets that same year, media services assets in 2003, an Eastern European fibre network in 2004, PSINet Europe/Via’s managed hosting services in 2005 and a managed services company in Bulgaria in 2006. The network footprint covers 35,000 kilometres with backbone/long-haul connectivity to 78 cities and metropolitan area networks (MANs) in 20 of those cities. The building assets comprise over 100,000m² of space ranging from carrier specification up to world class Data Centre grade. With 200 points of presence (PoPs), Interoute has both the extensive reach and the depth to meet customer requirements at minimal cost. The combined assets represent a total investment in excess of €2.5 billion. Restructured and re-launched in 2003, Interoute has no debt, two internationally recognized shareholders, and has among the lowest running-costs per kilometre of any pan-European network.

Given its recent construction, Interoute’s infrastructure uniquely supports the rapid deployment of new software-based products and services with high bandwidth demands, such as VOIP, digital media and expansion of secure private networks (VPNs). Its architecture and systems have successfully met mission critical tests such as the 2004 Summer Olympics, for which Interoute provided the European network for real-time TV broadcasts of the Games. Following the Olympics, the Greek operator OTE now uses Interoute as its network across Europe.

Interoute provides unparalleled end-to-end connectivity to every other major European incumbents, to major mobile operators such as Vodafone, 3 and Orange, and to leading American and Asian players such as ATT, VSNL and NTT. Interoute also provides voice and data services directly to large enterprise customers. Interoute’s revenues have almost doubled year-on-year (83% CAGR), with the fastest growth in its corporate products such as VPNs and VOIP.

Customer Base

Because of its state-of-the-art platform, Interoute has developed expertise in providing highly secure network services across a large European footprint. As a result, along with the world’s leading carriers, Interoute’s 12,000 plus customers include governments, Fortune 500 firms and a broad range of mid-tier corporations heavily dependent on secure networks. A small sampling follows:

n     Government services: Sprint Government Services; Ministry of Defence, Italy, Spain and Belgium; Department of Transportation, UK; United Nations Food and Agriculture Commission; Ministry of Agriculture, Latvia; Belgian Army; numerous embassies.

n     Media services: EMI; Universal; BMG; Virgin Radio and Megastores; News Corporation; Akamai; Warner Music; RobbieWilliams.com; Radio Italia; National Magazines; Canal+; BBC; Decca Music; Hachette; Independent News; Agence France Presse; Bloomberg; Google; CBS.

n     Corporate services: Ford; BMW; Mistubishi; Veolia (formerly Vivendi); We; Brabantia; Nintendo; Royal Wessanen; Siemens; Marriott; BNP Paribas; Tesco; Standard Bank; Capio; JP Morgan Fleming; Bank of New York; Ricoh; Deutsche Post; Nestle; Air Berlin; Airbus; Dassault Aviation; Danieli; Lloyds TSB Bank; Goldman Sachs; Bear Stearns; Dunlop; Allianz.

Products and Services

Interoute’s rapid growth in both wholesale and corporate customers is coupled with gross margins of 68%, a combination made possible by the way the network services are structured: in platform layers that are easily and economically scaled.

The diagram below describes this approach. Interoute’s core transport and access network is fully built out and operational, allowing additional products and services to be added with minimal incremental equipment and investment. The rollout of Voice Services across Europe, for example, simply required the deployment of a handful of soft-switches in the Points of Presence already on the network in key cities, from New York to Prague. Interoute is now the largest provider of Carrier-grade VOIP in Europe. With the launch of its iSip secure VOIP product for enterprises, Interoute is offering the same technology advantages to corporate customers.

A more detailed description of the product portfolio follows:

Infrastructure Services

Duct and dark (unlit) fibre are available on 17,000 km of Interoute’s backbone network and on approximately 50% of its 1,200 km of metropolitan area networks. Co-location services are also available in more than 190 Interoute PoPs and Data Centres.

Bandwidth Services

SDH and wavelengths are available across Interoute’s entire 35,000 km network footprint, and Interoute enjoys considerable cost and operational advantages delivering these services on its own infrastructure. Interoute interconnects with numerous local providers at the metro PoPs in order to provide these services end-to-end.

Ethernet Services

Ethernet services are available across Interoute's footprint with connectivity ranging from 2mb to the first pan-European 10Gigabit Ethernet service. In addition to Ethernet Private Line Services, Interoute also provides Ethernet Virtual Private Line and Ethernet VPN services. By utilising both Ethernet over SDH and Ethernet over MPLS Interoute can provide services that can meet both the most effective price and the most stringent service levels, furthermore this dual deployment ensures the most widespread coverage for long haul Ethernet services in Europe.

IP Services (MPLS)

Interoute’s pan-European MPLS-based IP network is the platform for delivering a range of Internet services, IP-based Voice services, Media services and VPN services. The Internet services include Internet Transit (targeted at Service Providers) and Internet Access (targeted at corporates). Speeds offered range from E1 up to Gigabit Ethernet. Interoute’s extensive peering in Europe allows it to offer a unique European Transit offering -EuroTransit.

Virtual Private Network (VPN) Services

Interoute provides Wide Area Network (WAN) services to corporates and other large international organisations. Based on MPLS, Interoute’s VPNs offer the benefits of traditional networking solutions (in terms of privacy and security) as well as the additional benefits of greater flexibility and control. In addition to network connectivity, Interoute’s VPN solutions can include a range of additional features depending on the customers’ requirements, such as Internet Access (with Firewall), remote access, ISDN back-up, etc. This platform is also used to deliver a range of Extranets for sectors such as Media and Finance.

Voice Services

Interoute operates a state-of-the-art, IP-enabled voice network based on soft-switch technology that provides services to the wholesale and corporate markets. The platform is access independent, supporting traditional TDM as well as Voice over IP (VoIP), interconnect and translation.

For the corporate market Interoute offers iSip, a secure Skype-like service that does not endanger corporate networks, with free calls using either landlines or PCs. Other corporate voice offerings include a least-cost-routed outbound voice service (using directly connected National PTS, Mobile and International Carriers).

To the carrier and voice service provider market, Interoute offers a market-leading service called Virtual Voice Network (VVN). Customers lease a partition on Interoute’s switch and enjoy the benefits of an IP-based switching platform without the costs of deploying and managing their own. Customers are able to interconnect securely with public and private VoIP providers; substitute or complement existing bilateral agreements with new TDM or VoIP interconnects; and trade (commission free) with the other carriers and service providers.

Managed Hosting Services

Interoute provides hosting services to both large and small corporate customers and offers a full suite of services from basic hosting to managed hosting, security and storage including disaster recovery and professional services. Interoute hosting services are a key element of Europe’s Digital Supply Chain, with the data centres alone supporting over €1 billion of daily eCommerce transactions.

Media Services

Interoute offers three web-based services targeted at Media companies to help them distribute promote and secure their digital content using Digital Rights Management (DRM). Media Manager enables clients to encode, store, manage and stream online audio and video content. Media Live Stream for live radio and television stations or high capacity events such as TV reality shows and pop concerts. Share, targeted at music companies, allows customers to manage securely the internal and external distribution of music (and associated visual content), and uses watermarking as well as DRM technology to control unauthorised use and to deter piracy. Both products are used widely by the music industry in Europe today.

Network and Systems

Interoute’s service platforms are built on a mix of hard engineering in the network overlaid with software.

Physical Layer

Interoute owns “down to the ducts” 17,000 km of fibre optic cable, consisting of 12 rings, 48 fibre pairs and managed by an Automatic Fibre Management System (AFMS). It owns an additional 10,000 km of fibre with a total of 47,000 km of lit fibre. It connects more than 78 cities in 21 countries (19 European, USA and UAE). It’s 20 city fibre networks (MANs) cover 1,200 km, the majority of which is owned duct and fibre, and offer over 120 Metro PoPs.

Transmission Layer

Interoute operates Dense WDM systems that minimize the cost of both regional and pan-European transmission. Similarly, the network’s SDH systems are designed to cost-effectively support both metro and long-haul requirements. This infrastructure also supports high-capacity Ethernet, enabling users to easily and economically burst bandwidth on demand. This combination of high capacity capabilities is unique in Europe.

MPLS/IP Network

Mirroring the transmission layer, Interoute operates Europe’s largest native multi-service MPLS/IP network, providing a platform for the most advanced broadband offerings. Services include long haul Ethernet, hosted voice services, corporate network services, internet services, media streaming and secure content distribution. Its geographic reach has pushed Interoute into the ranks of Europe’s premier internet service providers, with fibre connectivity into all the major European exchanges including New York and direct routes to all the major peers in Europe.  

Operations and Business Support Systems (OSS, BSS)

Interoute has a common architecture to support all services from physical infrastructure to service platforms. The advantage of this legacy free system is that it easily scales to support Interoute’s rapid growth. Key components include a full capability CRM system, a single logical and physical inventory management system covering all layers of the network, and a customer self-care web portal. These combined with standard vendor network management systems provide the capability for cost-effective central control of the highest quality.

Web-based Customer Service

A customer portal allows customers to monitor network performance, review SLAs, raise and monitor trouble tickets, track orders and view and query invoices.

Metro Markets and Metro Area Networks

City Interoute PoPs Interoute MAN (kms

London  19 51

Amsterdam  17 129

Paris  12  85
Frankfurt 13 98
Berlin 5 136

Hamburg  4 134

Dusseldorf  4 73
Munich 4 26
Stuttgart 6 53
Hannover 2 39
Brussells 4 29

Milan  8 38
Rome 2 147
Madrid 5 27
Barcelona 2 77
Vienna 6 70
Zurich 6 12
Geneva 3 31
Budapest 2 12

Dubai  1+12 with Du  100 with Du

Interoute Network Footprint

Further information

Closely Held

n     Sandoz family Foundation (majority)

n     Dubai Holding

Unique Telecoms Asset

n     Owned duct and fibre network – thus “future-proofed”

n     Exceptionally low cost, high quality, scalable operations for rapid growth of new services

n     Centralized technology group, with sales and sales support teams in each country where Interoute operates. Cost-cutting and savings is a company ethic

n     Deep network, with 1200 kilometres of metro fibre, enabling direct or minimal-cost connection to end users

n     Rapidly growing customer base including wholesale, government, media and corporates

Unique Service Offering

n     Interoute offers the largest network reach in Europe, which positions the company at the forefront of connectivity versus its competitors

n     Interoute represents a single source of supply and ability to access/connect to other networks. The company’s core IP network is peered at the majority of European exchanges

n     The Company is a leader in pan-European VOIP, IP and media services

Growing Customer Base

n     Its strong customer base includes all European incumbent operators, leading North American and Asian operators as well as the majority of European Alternative Network Operators. Interoute provides the European network for the Greek operator OTE, and delivered the terrestrial transmission of the 2004 Olympics to broadcasters throughout the world

n     Interoute’s non-wholesale customer base includes military and government agencies, as well as Fortune 500 firms and a broad range of mid-tier corporations

Industry Leader in Network Reliability / Stability

n     Industry-leading ‘trench-up’ investment in network reliability and stability

o         Deep construction in order to minimize risk of breaks

o         Network diversity due to dual cable installs in separate ducts along single routes. Network nodes connected by diverse redundant routes aimed at maximising network uptime

o         AFMS technology, which allows to detect and locate faults within 1metre

o         24x7 maintenance centres across network

n     Experienced Network Engineering & Operations management team including Design and Build capabilities

Strong Financial Growth

n     By virtue of its restructuring, which was completed in early 2003, Interoute has a strong, debt free balance sheet. Since then Interoute has experienced significant revenue growth, going from €24m in 2003, €57m in 2004, €84m in 2005 and €140m in 2006. Given the nature of the business, much of the revenue is underpinned by existing contracted recurring revenues.

n     In addition to the €2.5 billion asset investment, additional cumulative funding of €1 billion has been provided in working capital. The group also has deferred tax attributes of at least €1.4 billion which can be utilised against future taxable profits.

n     Interoute’s relatively fixed operational cost base enables new revenue to flow directly to the bottom line.