[Sydney, AUSTRALIA] A deal that would have formed the second largest broadband company outside the U.S. has collapsed, leaving the Australian market more uncertain than ever. The merger between chello and Excite@Home, announced in July this year, was terminated by UnitedGlobalCom which cited "market conditions" and asked Excite to consider alternative transactions.

Excite@Home decided that "for a number of reasons, it was no longer in the best interests of shareholders, customers, overseas joint venture partners and employees to pursue this transaction." Excite@Home said the complexity of the proposed venture, including the "involvement of multiple shareholders with differing opinions and interests", would pose a risk to the company's growth outside of the U.S.

Excite's Australian subsidiary insisted that the collapse of the deal would have no material effect on business here. "From that period till today nothing has actually changed in our operations locally," said a company representative. "There was no integration of staff or monetary transactions. We just pressed on with business as usual, so when the deal was called out it hasn't had any physical effects on us."

But at the time of the deal it was widely expected that the international merger would trigger an Australian JV between @Home (locally linked with Cable & Wireless Optus) and chello (partnered in Australia with Austar). A chello representative told australia.internet.com "we'd be looking forward to exploring the possibility of a merger."

Excite@home confirmed today that this had been the plan until the agreement's collapse, saying "This agreement meant Excite@Home Australia and Chello operations locally would have been aligned down the track. However, at present there are now no plans for this to go ahead."

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