Colt Telecom has sublet its internet data centre in Dublin to the search engine Google in a move that should provide it with a much needed cash injection.
The deal, which has not yet been officially announced by either firm, comes as Colt filed results in the Republic showing it lost €20.1 million in the year to the end of December 2002.
Accumulated losses at the telecoms firm's Irish operation now stand at €54 million after just three years of operation. The majority of the losses reflect a massive writedown on the valuation of Colt's fibre telecoms network and internet data centre.
Colt is one of the few pan-European telecoms firm to locate in the Republic. It has constructed a 150-kilometre fibre optic network in Dublin and similar networks in 12 other European countries.
A breakdown of Colt's operating loss in 2002 show it took an €11 million impairment charge relating to the write-down of the value of its previously "mothballed" internet data centre located on the Long Mile Road.
It is understood Google, the world's biggest internet search engine, has sublet Colt's facility to locate some of the web servers that will power its search engine in the Europe region. The deal will enable Colt to realise some return on its multimillion euro investment in the centre, which was made during the hype of the technology boom in mid-2000.
Despite the huge losses accumulated by Colt in Ireland, the company's global president and chief executive, Mr Steve Akin, said the company remained committed to the Republic yesterday.
Asked if the company would consider pulling out of Ireland due to the poor results, Mr Akin said Dublin was an important part of Colt's footprint in Europe.
"Never say never but strategically we want to a pan-European carrier so we need to go to all the major corporate centres in Europe," he added.
Colt's managing director for Ireland, Mr Gary Keogh, said the company would grow its revenues by 110 per cent in 2003 to about €7 million. Revenue growth during 2004 would be more than 40 per cent, he said.
Colt's Irish operation should be making a profit in 2005, added Mr Keogh, who heads a team of 20 employees at its headquarters.
But Mr Akin warned that there was less competition in Republic's telecoms market than in most of the other 13 European countries in which it operated.
A key issue which Colt has identified in the Republic is the lack of availability of low cost backhaul facilities to enable it to offer services outside Dublin.
Mr Akin, who has led Colt through a cash crisis and restructuring over the past 18 months, said the firm was on a sound financial footing and would reach cash flow positive in 2005.
Colt, which is based in Britain, was forced to fight off an attempt by the US hedge fund Elliot Associates to wind up the company last November. The fund alleged Colt was effectively insolvent.
Mr Akin, said this legal case was "grossly exaggerated" and notes that Colt ended the third quarter with £934 million cash on its balance sheet.
