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PETER KENNEDY in Vancouver LAWRENCE SURTEES in Toronto

3 60networks Inc. shrugged off jittery markets yesterday and immediately became Canada's second-largest telecommunications firm with a market value of $20.6-billion.

The success of 360networks' initial public offering (IPO) should help calm the fears of investors worried that the shine had come off technology stocks.

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Following a delayed opening, the stock rose $7.33 to close at $28 on the Toronto Stock Exchange on a volume of 8.6 million shares. It rose $5 (U.S.) on the Nasdaq Stock Market to close at $19.

The issue raised $2.4-billion that the company will use to expand its fibre-optic networks.

360networks, based in Vancouver, has risen from its obscure roots in the Alberta oil patch to become Canada's second-most-valuable telecommunications firm, behind industry giant BCE Inc.

Although its market capitalization is far behind BCE's value of $98.5-billion, 360networks vaulted well ahead of other players such as BCT.Telus Communications inc. and AT&T Canada Inc.

360Networks will have 794 million subordinate voting shares outstanding when the offering is completed, including an overallotment option of 6.9 million shares, the 46 million shares offered in the IPO, and 81 million multiple voting shares held by insiders.

While the stock's debut didn't come close to matching the first-day performance of 724 Solutions Inc. and other recent technology IPOs, it was better than some market watchers had expected.

Turbulent markets recently forced the company to scale back the price of its IPO to $14 (U.S.) from $18.

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"It is very gratifying to know that demand for the company is as strong as it is," chief executive officer Greg Maffei said in an interview. The 39-year-old former Microsoft Corp. chief financial officer joined 360networks in December.

Mr. Maffei said he was pleased with the response to the offering, which also attracted major players such as News Corp. Ltd. chairman Rupert Murdoch.

He said the company has an extra $800-million on hand to fund the expansion of fibre-optic lines, which carry anything from phone calls to Internet connections through beams of laser light that move over glass strands.

"We are now fully financed for our announced business plan," chief financial officer Larry Olsen said.

360networks is one of a growing list of savvy newcomers that are deploying the fibre-optic infrastructure needed to meet the burgeoning demand for faster Internet and e-commerce networks. The company often co-operates with rivals such as Metromedia Fiber Network of New York by swapping fibre lines.

Previously known as Worldwide Fiber Inc., 360networks began as a spinoff of Vancouver-based construction giant Ledcor Industries Ltd., controlled by the Lede brothers. (When 360networks' offering closes, Ledcor's stake will fall to about 31 per cent.)

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The company obtains access to rights-of-way and manages the construction of fibre networks between and within cities. 360networks then sells strands of so-called "dark" or unlit fibre to telephone companies and Internet service providers -- such as the $200-million (Canadian) deal to sell one dozen lines to MetroNet Communications Corp. (now part of AT&T Canada Corp.), in 1998.

360networks has earmarked the proceeds from its IPO and debt financings for a $4.8-billion (U.S.) project to build a 90,000-kilometre network, including undersea cables, to link North America, South America and Europe. The 12,200-kilometre "Hibernia" undersea link between Halifax and Liverpool alone will be able to handle about 20 million phone calls simultaneously.

Analysts believe 360networks will be able to take advantage of the global explosion in demand for data communications services when that network is in place by 2001.

"We remain confident that demand for high-bandwidth applications will grow substantially, enabling the company to leverage its network and grow its cash flow," said Brendan McGovern, an IPO analyst with S&P Emerging Growth Fund in New York.

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