company they want to use for local calls under a deal forged between the Bermuda Electric Light Co. Ltd. and Cable & Wireless PLC.

North Atlantic Telecommunications Ltd. will compete with the Bermuda Telephone Co. Ltd. using a fibreoptic cable system now being laid in Hamilton through BELCO's underground network.

Cable & Wireless will provide telecommunications expertise to the enterprise, while BELCO will provide the network and technical muscle on a contract basis.

As part of the deal, BELCO Holdings Ltd., the electric utility's parent, has bought a majority stake in North Atlantic. Cable & Wireless has also bought a stake. BELCO will use a small part of the fibreoptic network for data communications with its electrical services.

The vast majority of the new network will be used by North Atlantic to provide a high speed, high volume telephone and data telecommunications service. North Atlantic will manage and control the fibreoptic network, which it will lease from BELCO.

"The group will be able to take advantage of the synergies between the companies,'' BELCO Holdings president Garry Madeiros said in an interview yesterday. He would not reveal how much BELCO Holdings owned of North Atlantic.

North Atlantic is going after the big business market in Hamilton and sees data rather than voice communications as its main growth market. The company has been in discussions with the international companies on the Island, including the major reinsurers, about providing data networks for them.

Fibreoptic cable has the capacity to carry voice, data, and video services.

"Data is the future,'' Mr. Madeiros said. "It is the area that is going to grow. The more options that we provide our commercial customers for fast, reliable, cost effective communications, the more revenue options we will have.'' North Atlantic expects to begin earning revenues by the end of the year and will be profitable by the year 2000.

Telephone users in Hamilton who use North Atlantic's service will be able to reach to the rest of the Island through a proposed interconnection with Bermuda Telephone Co.'s service. North Atlantic will pay Telco a fee for the interconnection. Regulations and policies about the interconnection still need to be worked out, Mr. Madeiros said.

North Atlantic was set up by Kenneth DeFontes of DeFontes Broadcasting Ltd., which operates VSB television, and Barry Kayes. The company was offered a licence under the Telecommunications Act when Government opened up competition in the local and international arena. Telco currently holds the monopoly to provide local service on the island. TeleBermuda International Ltd. began competing in the long-distance market with Cable & Wireless last month.

North Atlantic's original business plan estimated network would cost $13 million to install.

When the fibreoptic network is completed Hamilton customers will be able to choose between North Atlantic and the Bermuda Telephone Co. for their local service, and between Cable & Wireless and TeleBermuda for long distance.

BELCO alliance takes on Telco `We will try to ensure that we provide a service that is cost effective, is high quality and reliable, and offers a slate of services that provides high value to customers,'' Mr. Madeiros said.

Cable & Wireless' stake in North Atlantic will not give it an advantage over TeleBermuda. Customers will be able to choose either company for their long distance service.

"North Atlantic will provide access to any international carrier even though Cable & Wireless is a part owner,'' he said.

Mr. Madeiros said talks with North Atlantic's principals began about eight months ago and the deal was concluded two months ago. The deal is part of BELCO Holdings' diversification strategy which began with the purchase of the Bermuda Gas & Utility Co. Ltd. in 1994, and the set up in 1995 of BELCO Energy Services Co. Ltd., which provides advice to companies on electrical use.

BELCO Holdings will eventually gain revenue from North Atlantic's profits and through its contracts to provide the network and technical expertise to the company. North Atlantic will hire about 12 staff.

Mr. Madeiros said the utility's entry into the telecommunications market was in line with a global trend of diversification in the industry as companies try to seek additional revenues.

"A number of large utilities in the US and Europe are either owners or partial owners in telecommunications companies,'' he said. "The purchase is quite in line with the global trend.''