TeleBermuda International Ltd. (TBI) has formed a joint venture with a UK company to establish a new European telecommunications carrier.

The agreement signals the company's initial step in targeting the European market and offering other carriers routing services through Bermuda.

TeleBermuda has linked up with The Rocom Group Ltd., the UK's largest telecommunications distributor, to form ROCOM TBI. The company, which will be based in Europe, is scheduled to begin operations in October.

ROCOM TBI will develop a telecommunications network and offer its services to third party resellers and carriers. The new company's intended customers are expected to be companies reselling cellular airtime who also want to enter the fixed line market, telephone system manufacturers and "dealers integrating network access provision into system sales'', according to a Press release.

Canadian Mike Kedar, who founded TBI, called the joint venture the first step in the extension of the company's telecommunications system to Europe.

TBI began operations in Bermuda this year, competing in the long distance market with Cable & Wireless Plc. The company recently raised $43 million in loans to pay for its completed fibreoptic undersea cable, called BUS-1, to the US.

"The exiting total value of overseas telecommunications traffic in and out of Bermuda is estimated to be approximately US$100 million per year, and an important element of this business is related to European activities,'' Mr.

Kedar stated in the Press release.

"We plan to extend the BUS-1 system to Europe to coincide with the growing demand for telecommunications services consequent on European deregulation.'' Rocom chairman Robert Old added: "We enjoy the advantage of being able to offer exceptionally flexible, efficient and cost competitive tariff structures and billing packages to our clients so that they can offer bespoke contracts to their end user customers.

"Moreover, since we shall sell only to third party clients and not directly to end users, the conflicts of interest which bedevil many relationships between carriers and their clients will not exist. Quite simply we shall become the carriers' carrier.'' In the prospectus for TBI's initial share offering, the company's management stated that phase two of its strategy in establishing its base in Bermuda was to target resellers and new carriers in the European market.

Under the plan, TBI would use its switching technology to route voice and data traffic for the resellers and carriers. TBI would also provide services such as operator assistance, international director assistance, 900 services, data processing and computer software delivery to the companies.

"Management believes that given the declining cost of bulk transmission and the unbundling of switching functions, many carriers operating in high tax rate jurisdictions may choose to locate some of these profitable telecoms functions in a low tax rate jurisdiction such as Bermuda,'' the prospectus stated.