While long term ABS has yet to become a favored financing mechanism by European telecoms, these companies are increasingly looking toward the ABCP market for funding.

Wind Spa, an Italian phone company, is currently lining up a E400 million facility of billed and unbilled receivables to be sold in October into Credit Agricole's Hexagon funding conduit. In June France Telecom sold over E400 million in to this same conduit.

In Dec. 2001, Deutsche Telecom sold E1.4 billion of telephone-backed receivables into the IRIS ABCP program operated by ABN Amro, while Netherlands-based KPN sold E250 million into a conduit. And there are several other companies that have privately-placed receivables deals into conduits.

Choosing the conduit market over term ABS may be a question of accessibility as well as taste. For one thing, longer term ABS need to be larger in size to be efficient. Analysts also note that the telecoms are able to gain exposure and experience in the conduit market, allowing investors to become comfortable with the assets before considering investing in term securitizations.

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