& cplSiteName &

Asian Carriers Court Takeover Bids

Robert Clark
News Analysis
Robert Clark
8/1/2014
50%
50%

Two perpetually struggling international bandwidth businesses have reportedly stepped up their efforts to be acquired, and both are being looked at by the same Hong Kong-based wholesale operator.

Global Cloud Xchange , the subsea capacity division of India's Reliance Communications Ltd. (RCom), looks set to be sold to Citic Telecom International Holdings Ltd. (CTI), a unit of the Chinese government investment group Citic Pacific, according to CNBC TV-18.

Citic has also been linked to Pacnet , the progressive wholesale and enterprise service provider that is believed to be seeking US$1 billion for its current private equity owners. (See Asia's Telcos Still Figuring Out Their Cloud Moves and Pacnet Turns On SDN in APAC, US.)

RCom has been trying to offload its capacity division, until recently known as Reliance Globalcom, for years. In 2009, the Indian operator was rumored to be seeking a buyer for its submarine cable properties (formerly FLAG Telecom), and reportedly was close to selling the entire global unit in 2013. It also considered an IPO in 2012, but abandoned that plan. (See Rumor: Subsea, Ethernet Assets for Sale and Reliance Global Unit Sale Imminent.)

The timing of the latest M&A reports is intriguing, given that Reliance only introduced the Global Cloud Xchange (GCX) brand just four months ago, and recently announced a new cable project to provide a direct subsea link between Mumbai and Singapore. (See Reliance Rebrands With Its Head in the Cloud and Global Cloud Xchange Plans New Mumbai-Singapore Link.)

It also appointed Bill Barney, the former CEO of Pacnet, as its CEO in January this year. (See Pacnet Calls Time on Its CEO.)

The deal with Citic has been in the works for months, but was reportedly delayed while GCX completed a $350 million debt issue, which was successfully completed this week. Most of the proceeds will be used to pay off a $250 million loan to GCX's parent, though some of the remaining funds will go towards the construction of the Mumbai-Singapore link.

Pacnet, which was formed in 2008 from the combination of the collapsed Asia Global Crossing and Singapore's Pacific Internet, has found the going hard in the bandwidth and managed services market, where competing with Tier 1 telcos and dealing with continual price erosion make trading tough. It generated revenues of $471.6 million in 2013, down 9% from the previous year, but its gross margin improved to 56% from 50% as it discontinued some lower-margin services.

Like GCX/Reliance Globalcom, it also considered an IPO (in 2011).

The potential involvement of Citic Telecom in both potential deals is no coincidence, as it highlights the determination of Chinese authorities to keep their communications secure in the wake of the Snowden revelations.

Julian Rawle, principal at Julian Rawle Consulting, said the Chinese "don't want to rely on others for their development -- they want to reach the US directly."

However, a further twist could be that any sale by RCom to a Chinese government-backed telco would need approval from Indian security officials. The two Asian giants have an uneasy relationship, and India has put controls on Chinese vendor gear being deployed in Indian networks.

— Robert Clark, contributing editor, special to Light Reading.
Dan O'Shea, Managing Editor, also contributed to this article.

(4)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
R Clark
50%
50%
R Clark,
User Rank: Blogger
8/2/2014 | 12:34:18 AM
Re: Still just a scale game?
I think IoT is a much bigger play for telecom access rather than longhaul. Right now the big driver on subsea capacity is 4G data and video but the problem is these smaller players just can't get much of the action. The owners of both these cables have been trying to unload the assets for several years and clearly they don't see it getting better regardless of the aggregate demand.
sam masud
50%
50%
sam masud,
User Rank: Light Sabre
8/1/2014 | 11:15:06 AM
Re: Still just a scale game?
As you say, there maybe overcapacity in long-haul. But what I finding interesting is that they are unloading assets at a time when there is a huge buzz about Internet of Things and all kinds of speculation on how much traffic IoT will generate.

 
R Clark
50%
50%
R Clark,
User Rank: Blogger
8/1/2014 | 8:44:22 AM
Re: Still just a scale game?
I think the lesson that was apparent in the bandwidth bubble still applies, which is you've got to have demand at the end of your pipe. Most longhaul subsea cables are backed by tier 1 carriers who all have customers to serve. RCom and Pacnet just have that and that's why they've struggled, especially when prices are falling steadily year by year and every two to three years you're going to have to tip in for an upgrade. Citic Telecom has quitea may not have that but this is a political as much as commercial play for them.
Ray@LR
50%
50%
Ray@LR,
User Rank: Blogger
8/1/2014 | 8:05:52 AM
Still just a scale game?
Is this still a scale game? How many subsea wholesale operators should there be in the world?
From The Founder
Kicking off BCE 2017, Light Reading founder Steve Saunders lays blame for NFV's slow ramp-up and urges telecom to return to old-fashioned standards building and interoperability.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Custom TV
The Overall Objective Is to Win the Game

6|26|17   |     |   (0) comments


SCTE•ISBE's Chris Bastian discusses Energy 2020's success to date and the importance of a flexible approach that allows for changes in specific strategies in order to reach significant milestones.
LRTV Interviews
CenturyLink: Let's Get Past SD-WAN Hype

6|23|17   |   04:02   |   (0) comments


Technology becomes a "shiny object" unless it's properly focused on solving business needs for enterprise customers, says Bill Grubbs, network solutions architect for CenturyLink. He explains to Light Reading why SD-WAN deployments have to be tailored to specific needs – and more.
Women in Comms Introduction Videos
Infinera's Sales Director Paints Tech's Big Picture

6|21|17   |   4:14   |   (1) comment


Shannon Williams, Infinera's director of sales, shares how she achieves work's many balancing acts -- between her role and the broader company, today and tomorrow's tech and more.
LRTV Custom TV
SD-WAN Innovation & Trends

6|20|17   |     |   (0) comments


Versa CEO Kelly Ahuja discusses with Carol Wilson the current status and trends in the SD-WAN market, Versa's innovation around building a software platform with broad contextualization, and the advantages that startups can bring to the SD-WAN market.
LRTV Interviews
Ovum's Dario Talmesio on 5G in Europe

6|20|17   |   02:16   |   (0) comments


At 5G World 2017, Dario Talmesio, principal analyst and practice leader on Ovum's fixed and mobile telecoms European team, explains the emerging trends amongst European operators as they prepare for 5G.
LRTV Custom TV
Putting Power on a Pedestal

6|19|17   |     |   (0) comments


ARRIS's John Ulm says a major accomplishment of SCTE•ISBE's Energy 2020 program is increased focus on power cost and consumption, including inclusion of energy requirements in operators' RFPs and RFIs.
LRTV Custom TV
Gigabit Access: The Last-Mile Pipe for All Future Services

6|19|17   |     |   (0) comments


A Gigabit access platform being deployed today must be able to deliver all types of services to an increasing number of devices. A non-blocking architecture is necessary to support the ever-increasing growth in bandwidth demand. The Huawei Gigabit access solution is based on a distributed design that is fully scalable to deliver a unprecedented performance.
LRTV Custom TV
Key Factors to Successfully Deploy an SD-WAN Service

6|19|17   |     |   (0) comments


As service providers transition their SD-WAN solution from trials and limited deployments into production at large scale, there are important considerations to successfully operationalize these solutions and realize their full potential, without adding complexity, introducing uncertainty or disrupting current business operations. Sunil Khandekar, CEO and Founder ...
LRTV Custom TV
IoT Solutions: Rational Exuberance

6|19|17   |     |   (0) comments


IoT solutions are morphing from hype into viable business opportunities. Huawei has the platform and ecosystem support to help carriers successfully address new business opportunities in the IoT space.
LRTV Custom TV
Realizing ICN as a Network Slice for Mobile Data Distribution

6|19|17   |     |   (1) comment


Network slicing in 5G allows the potential introduction of new network architectures such as Information-centric Networks (ICN) as a slice, managed over a shared pool of compute, storage and bandwidth resource. Services over an ICN slice can benefit from many architectural features such as Name Based Networking, Security, Multicasting, Multi-homing, Mobility, ...
LRTV Interviews
Ovum's Mike Roberts on 5G Uptake

6|19|17   |   04:08   |   (0) comments


Mike Roberts, research director for Ovum's service provider markets group, explains why he has boosted his 5G subscriptions forecast.
LRTV Interviews
AT&T's Hubbard on Intersection of SD-WAN & MPLS

6|15|17   |     |   (0) comments


Rick Hubbard, SVP of Network Product Management for AT&T Business Solutions, discusses how AT&T's approach to SD-WAN fits in with its overall virtualization strategy, explains how SD-WAN can improve enterprise customers' use of the cloud and addresses the intersection of SD-WAN and MPLS.
Upcoming Live Events
October 18, 2017, Colorado Convention Center - Denver, CO
November 1, 2017, The Montcalm Marble Arch
November 1, 2017, The Montcalm Marble Arch
November 30, 2017, The Westin Times Square
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Netflix's Lesson in Culture Expectation Settings
Sarah Thomas, Director, Women in Comms, 6/21/2017
No Imagination: UK Chip Biz Goes Up for Sale
Iain Morris, News Editor, 6/22/2017
Kalanick Steps Down as Uber CEO
Sarah Thomas, Director, Women in Comms, 6/21/2017
Buy American: Will It Affect the Telecom Sector?
Dan Jones, Mobile Editor, 6/21/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Following a recent board meeting, the New IP Agency (NIA) has a new strategy to help accelerate the adoption of NFV capabilities, explains the Agency's Founder and Secretary, Steve Saunders.
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
Animals with Phones
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.