Reliance Unit Targets 'Complacent' Giants

Global Cloud Xchange , the international communications services arm of Indian giant Reliance Communications Ltd. (RCom) , has set its sights on capturing business from the world's large multinational corporations, and believes its latest acquisition will give it the edge it needs to challenge the big name brands that currently dominate the global services market.

Reliance Globalcom was formed in February this year when the Indian carrier put all its international assets, including sub-sea network operator Flag Telecom and Ethernet services firm Yipes, under one corporate roof. (See Reliance Integrates Global Services and Reliance Bags Yipes for $300M.)

Since then Reliance, which aims to be "one of the Top 5 Global Datacommunications Enterprises in the world," has acquired managed VPN (virtual private network) specialist Vanco, giving Globalcom a business that generates annual revenues of $1.3 billion and EBITDA (earnings before interest, tax, depreciation, and amortization) of $340 million, according to Mark Thompson, president of Reliance Globalcom's data services business and Vanco's CEO.

Thompson believes the combination of Flag's physical assets, the Ethernet services platform of Yipes, and the global network capacity agreements that Vanco has built up with 700 network operators around the world, gives Globalcom the reach and capabilities to challenge the likes of AT&T Inc. (NYSE: T), BT Global Services , Orange Business Services (formerly Equant), and Verizon Enterprise Solutions , in the international services marketplace.

"Reliance international data services ambitions are significant. We're looking forward to challenging the complacency of the marketplace. We'll be a disruptive influence, and that'll be a good thing for customers," says Thompson, who points to the ongoing $1.5 billion investment in Flag's network and the $200 million upgrade and expansion of Yipes's Ethernet infrastructure as part of the strategy to compete with the big guns. (See Reliance Globalcom Beefs Up Its Metro, Yipes! Here Comes a Spending Spree, Fujitsu Scores Massive FLAG Deal, and FLAG Announces NGN.)

It helps that Globalcom, which has around 1,300 staff, isn't trying to compete from a standing start. It already has 1,400 enterprise customers -- Yipes has been strongest in North America, while Vanco has built most of its business in Europe -- and 200 carrier customers. Globalcom also boasts 1 million square feet of hosting space in 13 data centers around the world.

But Thompson doesn't plan to emulate his main rivals by adding IT services to Globalcom's mix, something in which BT, for example, has invested heavily. (See BT Buys IT Firm, BT Buys Asia/Pac Integrator, BT Buys INS, BT Plans Further Global Push, FT Invests in Integrator, FT Unifies Business Services, and Verizon Expands Managed Services.)

"I don't see myself building those capabilities in the near future –- I think it would confuse organizations," says Thompson, who believes such services should be provided by IT firms and systems integrators.

"Only in the telecom industry do companies believe they need to do everything. In other sectors, companies build a supply chain. I'm happy to partner –- I don't have any plans to try and compete with the likes of IBM Corp. (NYSE: IBM) and Electronic Data Systems Corp. (EDS) (NYSE: EDS)," adds the Globalcom man.

One area Thompson is looking at, though, is content delivery: Reliance Globalcom just announced a strategic alliance with Internap Network Services Corp. (Nasdaq: INAP) to deliver content delivery network (CDN) services in India and the Asia/Pacific region, and that's something the Reliance man believes can be built upon. (See Reliance, Internap Team and Internap Expands CDN.)

— Ray Le Maistre, International News Editor, Light Reading

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