The last 5 years has seen an incredible amount of so called wealth being created and subsequently destroyed in the telecommunication sector, resulting in the accumulation of a mountain of debt. This article provides background on the telecom euphoria and attempts to unearth the extent of the debt problem. It also explores how companies are dealing with the problem.
Serious Debt In their quest to prepare us for the Internet century, US providers of telecom services borrowed over $353 billion (figure 1) from the beginning of 1998 until the end of 2000, with much of that money going to build new infrastructure. In the same period they raised approximately $87 billion on the stock market for a grand total of $440 billion.
$US billion
Telecom Fund raising in the US 200
Venture capital
100 Syndicated bank loans
0
by Pierre Tremblay
1990
Figure 1 14
1998
1999
Year
2000
Public stock and bond