Aether Systems and Reuters Launch European Data Service
By Cindy Christ

Wireless technology provider Aether Systems and Reuters Group PLC, the world's largest international news agency, unveiled a new venture Friday offering mobile Internet and data services in Europe.

The firm, called Sila Communications, operates a network of data centers throughout Europe, providing mobile access to corporate information, Reuters content, Internet information and applications, e-mail, and secure transaction capabilities.

The company will be independently managed and headquartered in London.

The companies said Sila would first target the financial services markets, offering wireless trading systems on any device or network, and rapidly expand to other sectors through acquisitions and internal growth.

Owings Mills, Md.-based Aether Systems holds a 60 percent interest in Sila through a $15 million cash investment and its recent $85 million acquisition of IFX Group Ltd., Europe's largest provider of mobile financial data.

Based in London, Reuters owns a 40 percent stake in Sila, contributing $22 million in cash and its wireless applications asset, Futures Pager, a U.K. firm providing paging and real- time delivery of financial market data to cell phones, pagers and handheld computers.

IFX and Futures Pager own extensive wireless infrastructure assets in the UK, France, Germany, Spain, Norway, Sweden, Finland, Denmark, the Netherlands, Portugal and Singapore.

"The market for wireless services in Europe is more mature than in North America, and we will attack it aggressively. Sila aims to become the leading wireless application services provider in Europe with plans to expand to Asia in the near future," said David Oros, Aether Systems chairman and CEO and Sila chairman.

Research shows that cell phone use in Europe leads the U.S. by about 18 to 24 months, largely because the region adopted a single transmission format called GSM allowing seamless connections between countries.

Lehman Brothers analysts expect wireless penetration in Western Europe to grow to 72 percent of the population by 2003, with Sweden, Norway and Finland reaching 80 to 90 percent.

Launched as a public company in October 1999, Aether Systems provides technology-allowing people to use handheld devices for mobile communications and real-time transactions.

Aether's strategy initially focused on developing applications for financial services, including TradeRunner, a real-time wireless trading system for customers of Morgan Stanley Dean Witter Online, and the Reuters MarketClip service for stock quotes, alerts and information.

The company also is developing wireless trading and financial services for other financial institutions, including Charles Schwab.

According to market research firm the Yankee Group, financial transactions and stock trading will account for up to 20 percent of all data traffic by 2002.

Through recent acquisitions, Aether has expanded its services into the healthcare, sales force automation, and transportation and delivery industries.

In 1999, Aether lost $23.5 million on revenues of $6.3 million.

In addition to its news service, Reuters owns the Instinet electronic stock trading system.

Shares in Aether Systems (AETH) gained $4.50, or 2.8 percent, to $167.50 after trading as high as $174 intraday.

Before the market's recent correction, Aether was a high- flyer, rising more than 20-fold from its IPO price of $16 per share. During the last 52 weeks, Aether Systems has traded as high as $345 and as low as $41.

Shares in Reuters (RTRSY) fell $1.69, or 1.5 percent, to $107.75.