& 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
Download our complete guide to de-risking NFV deployment in 2016, including:
  • An eight-step strategy to deploying NFV safely, based on input from the companies that have already started virtualizing their production networks.
  • Interviews with leading executives at Colt, AT&T, Deutsche Telekom, Cisco, Nokia, ZTE, Ericsson and Heavy Reading.
  • Flash Poll
    Live Streaming Video
    Prepping for the Future: Upskill U Explained
    During this short kick-off video, Doug Webster, Vice President of Service Provider Marketing, Cisco, and Light Reading’s CEO & Founder Steve Saunders give an overview of Upskill U.
    LRTV Documentaries
    LRTV Report: Mobile Core Innovation

    4|28|16   |   25:32   |   (0) comments


    Hear from multiple industry experts from Deutsche Telekom, SK Telecom, Heavy Reading, Huawei, Cisco, Ericsson, Nokia, NEC and many more about developments in the mobile core as operators virtualize their IMS and evolved packet core systems and prepare for a 5G world.
    LRTV Huawei Video Resource Center
    NFV World Congress Highlight

    4|26|16   |     |   (0) comments


    The highlight of the NFV World Congress contains exciting telecom news. Join us for an inside look at Huawei's ICT 2020 plan and its latest collaboration with industry leaders.
    LRTV Interviews
    Unified Comms Finds Its Voice

    4|25|16   |   03:44   |   (0) comments


    Peter Quinlan, VP of UCC Product Management at Tata Communications, talks about the evolution of the unified communications and collaboration services sector and how voice is now a big part of current developments.
    LRTV Documentaries
    So... What Do We Do Now?

    4|25|16   |   03:24   |   (0) comments


    After a long hiatus, Max Dingman, the CEO of a GeeGhiz, returns for a motivational board room pep talk.
    LRTV Documentaries
    NAB 2016 Highlights

    4|21|16   |     |   (0) comments


    Light Reading's Cable/Video Practice Leader Alan Breznick climbs down from the slots to tell us about the latest news in broadcast technology at NAB 2016 in Las Vegas.
    Between the CEOs
    CEO Chat: Deepfield's Craig Labovitz

    4|21|16   |     |   (0) comments


    In this latest installment of the CEO Chat series, Craig Labovitz, co-founder and CEO of Deepfield, sits down with Light Reading's Steve Saunders in Light Reading's New York City office to discuss how Deepfield fits in with the big data trend and more.
    Shades of Ray
    Leading Lights 2016: Shortlists Announced

    4|20|16   |   0:53   |   (0) comments


    The judging is over and the Leading Lights 2016 shortlists have been published -- you can see who made the cut by clicking on this link.
    LRTV Custom TV
    Introducing MulteFire – Qualcomm at MWC 2016

    4|18|16   |   3.29   |   (0) comments


    MulteFire is the latest option for using LTE in unlicensed spectrum. As oppose to its close 'siblings', LAA and LTE-U, MulteFire operates solely in unlicensed spectrum, which enables it to offer the best of two worlds – LTE-like performance with WiFi-like deployment simplicity. In this interview, Sanjeev Athalye, Sr. Director, Product Management at Qualcomm ...
    Between the CEOs
    CEO Chat: Grant Van Rooyen of Cologix

    4|18|16   |     |   (0) comments


    Grant van Rooyen, president and CEO of Cologix, sits down with Steve Saunders, founder and CEO of Light Reading, in the vendor's New Jersey facility to offer an inside look at the company's success story and discuss the importance of security in the telecom industry.
    LRTV Huawei Video Resource Center
    ONS 2016 – Demonstration of Huawei's NetMatrix Multi-Vendor SDN Orchestrator

    4|15|16   |     |   (0) comments


    This demonstration shows how Huawei's NetMatrix SDN Orchestrator (SDN-O) addresses an operator's core service agility needs for services spanning multi-domain, multivendor networks: it includes a demonstration of:
    - Rapid New Service Design: using YANG to model a complex example of multi-domain, multivendor L3VPN network connectivity service that ...
    LRTV Custom TV
    AT&T Wants to Own North Carolina

    4|15|16   |     |   (1) comment


    Venessa Harrison, president of North Carolina for AT&T, tells how the company will expand its GigaPower service beyond the seven N.C. cities it already serves.

  • This blog, sponsored by AT&T, is the second part of a ten-part series examining next-generation broadband technologies titled "Behind the Speeds."
  • LRTV Interviews
    Will NC Be First Gigabit State?

    4|15|16   |     |   (1) comment


    Alan Fitzpatrick, co-founder of Charlotte Hearts Gigabit, spells out the state's progress in at least starting to wire nearly every major market for gigabit service.
    Upcoming Live Events
    May 23, 2016, Austin, TX
    May 23, 2016, Austin Convention Center
    May 24-25, 2016, Austin Convention Center, Austin, TX
    September 13-14, 2016, The Curtis Hotel, Denver, CO
    December 6-8, 2016,
    June 16-18, 2017, Austin Convention Center, Austin, TX
    All Upcoming Live Events
    Infographics
    A new survey conducted by Heavy Reading and TM Forum shows that CSPs around the world see the move to digital operations as a necessary part of their overall virtualization strategies.
    Hot Topics
    Ultra-Broadband Summit, Hong Kong
    Iain Morris, News Editor, 4/27/2016
    GoT Fans Curse HBO (Not Right) Now
    Mari Silbey, Senior Editor, Cable/Video, 4/25/2016
    Analysts More Than Bullish on Comcast MVNO
    Mari Silbey, Senior Editor, Cable/Video, 4/22/2016
    Mitel Asks: What Time of Day Do You Shower?
    Mitch Wagner, West Coast Bureau Chief, Light Reading, 4/25/2016
    Charter Jumps Gun on TWC Restructuring
    Mari Silbey, Senior Editor, Cable/Video, 4/26/2016
    Like Us on Facebook
    Twitter Feed
    BETWEEN THE CEOs - Executive Interviews
    In this latest installment of the CEO Chat series, Craig Labovitz, co-founder and CEO of Deepfield, sits down with Light Reading's Steve Saunders in Light Reading's New York City office to discuss how Deepfield fits in with the big data trend and more.
    Grant van Rooyen, president and CEO of Cologix, sits down with Steve Saunders, founder and CEO of Light Reading, in the vendor's New Jersey facility to offer an inside look at the company's success story and discuss the importance of security in the telecom industry.
    Animals with Phones
    Live Digital Audio

    Of all the tech companies in the Valley, Intel has made the most aggressive commitment to building a diverse and inclusive workplace culture. It's doing so by taking concrete, measurable steps, making a large financial investment and through a commitment to complete transparency about its progress. In this radio show, WiC Director Sarah Thomas will be joined by Shlomit Weiss, Intel's Vice President, Data Center Group, and General Manager of Networking Engineering, who will share with us why Intel is tackling this huge challenge, how and to what effect. She will also discuss her unique experiences leading development of Client SOC development in the past and today leading development of all of the chipmaker's silicon hardware for networking IPs and discrete devices and managing a team of 600 engineers across Israel, Europe and the US.