AT&T buys NorthPoint assets for $135 million

IDG News Service - AT&T Corp. has agreed to acquire the assets of NorthPoint Communications Group Inc., a bankrupt Digital Subscriber Line (DSL) service provider, for approximately $135 million, the companies announced yesterday.

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 yesterday, 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 doesn't 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."

Although 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 sought protection under Chapter 11 of U.S. bankruptcy law in January after a planned takeover by Verizon Communications fell through in November, leading to a shortfall in funding for NorthPoint (see story).

Verizon, which had planned to invest $800 million in NorthPoint, dropped the deal because it said NorthPoint faced declining business and financial conditions.

The company later sued Verizon, alleging violation of the terms of the takeover agreement. That suit remains unresolved, although NorthPoint said in a statement this week that it is shutting down its network and conserving cash until the asset sale takes place. The assets being sold to AT&T don't include the pending claims against Verizon, according to the NorthPoint statement.

Related stories:

• NorthPoint withdraws from European DSL venture, Dec. 29, 2000



• NorthPoint follows through on legal threats against Verizon, Dec. 8, 2000



• NorthPoint cuts workforce 19% in wake of Verizon pullout, Dec. 7, 2000



• Verizon, NorthPoint in heated dispute over DSL merger deal, Nov. 30, 2000