International CLEC Raises $115M Fourth Round

With plans to deliver commercial broadband wireless services to small and medium-sized businesses in five European markets, Denver-based competitive local exchange carrier Formus Communications Inc. earlier this month raised $115.8 million in its fourth round of venture financing.

Formus, which currently operates in Poland, has trial projects underway in France and Hungary and hopes to be awarded permanent licenses in those regions. Recently, the company was granted licenses in Finland and Ireland and, through a wholly-owned subsidiary, launched CLEC services in Germany.

“With so much backbone capacity being built around the world, we will likely be called on to solve bottleneck access problems found at the last mile,” said Chief Executive Osmo Hautanen.

Proceeds from the Series D round, which attracted first-time commitments from Intel Corp., Citizens Capital, CRI Media Partners, Janco Partners and Part’Com, will be used to develop services in regions where the company has been awarded a license. Formus has also increased its ownership in its German affiliate, Callino, to 100%.

Hautanen said existing investors all took at least pro rata stakes in the round. Since its incorporation in 1996, Formus has raised $202.3 million in venture financing from HarbourVest Partners, Chase Capital Partners, CIBC, Spectrum Equity, BancBoston, Northwood Ventures, IAS, M/C Partners, Centennial Funds and Telecom Partners.

Although Formus has licenses to operate in New Zealand and Latin America, Hautanen said the company is primarily focused on expanding its services in Europe.

“We will most likely find partners to work with in other regions,” he said.

Intel’s investment will be used exclusively to finance Formus’ services in Polish cities. The investment was made out of the chip manufacturers’ $3 billion corporate business development program, which invests in complementary companies in the Internet, software and telecommunications industries.

“This particular investment in Formus is consistent with Intel’s efforts to facilitate broadband services and fuel the growth of e-commerce in developing countries,” said an Intel spokesperson. “Our goal is to move the market a bit faster than it would have without our investment.”

Hautanen would not comment on the company’s future financing plans.