5 Nations, CSC Sign Deal to Share Infonet System
Computer Sciences Corp. said Thursday that it has formed a “strategic alliance” with France, West Germany, Sweden, Belgium and Spain to share in ownership or operation of its international data-transmission system, Infonet.
Some Pacific nations are expected to join the venture by year-end.
The El Segundo-based company portrayed the agreement, the subject of negotiations begun in January, 1987, as giving it a big initial jump on International Business Machines and other potential overseas competitors in the emerging market for the global transmission of computer messages and data.
Infonet President Jose Collazo said that CSC “early on saw the problems encountered by customers trying to extend their business communications overseas. . . . We saw the need for seamless, global services, where the users wouldn’t know they were crossing borders or networks.
“We saw the need not just in the United States but in foreign countries and felt that, by enlisting the PTTs (the telecommunications administrations), we could be a lot stronger than doing it by ourselves.”
Under the agreement signed Tuesday, the German Bundespost and the French telecommunications organization Transpac, on behalf of France Telecom, both bought 15% stakes in Infonet. Terms were not disclosed, but CSC said proceeds would have no significant effect on its 1988 earnings. The company reported 1987 earnings of $32.2 million on revenue of $1.03 billion; Collazo said Infonet’s annual revenue will pass $100 million this year.
CSC also granted short-term options to buy 5% interests to Sweden’s Teleinvest AB; RTT, the Belgian telephone and telegraph administration, and Telefonica, Spain’s telecommunications agency. Collazo said that Infonet expects by year-end to add other foreign telecommunications administrations as participants and that the venture eventually will have 10 foreign owners, although CSC intends to retain at least a dominant 30% stake.
Collazo declined to name the countries likely to join but said “some are Pacific.”
Each participating PTT will have a representative on Infonet’s board, along with Collazo and CSC’s chairman and president, William R. Hoover.
Collazo said Infonet, which has been in operation for nearly 10 years, has no competitors in the global data-transmission business. But he said announcements made by IBM abroad indicate that it plans to compete.
Barry F. Bosak, an analyst who follows CSC for Eberstadt Fleming, said the deal appeared to represent the company’s transformation of Infonet from a time-sharing computer network to one offering additional data processing services. Its 500 corporate customers include The Times.
The alliance, at the very least, Bosak said, shows that the company has developed “a very interesting merchandising capability.”
