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Global Cloud Xchange Chief Expects Takeover

Global Cloud Xchange CEO Bill Barney expects the Asian global bandwidth and managed services player to be acquired by a strategic industry investor.

He says Global Cloud Xchange , which delivers a range of services (capacity, cloud, data and managed) to carriers and enterprises, is already run independently from parent Reliance Communications Ltd. and will "eventually have new shareholders."

Barney wouldn't comment on reports that China's state-backed Citic Telecom International was planning to acquire the firm, but expressed confidence that a "pretty strategic" investor would become the new owner. (See Asian Carriers Court Takeover Bids .)

"Watch this space," he said at a press briefing to announce GCX's new cloud platform, called Cloud X, in Hong Kong.

Reliance has been trying for some years to offload the subsidiary, which owns one of the world's biggest global subsea cable networks. It hired Barney, the former CEO of another Asian telco, Pacnet, in January and dumped its former name, Reliance Globalcom. (See Reliance Rebrands With Its Head in the Cloud and Pacnet Calls Time on Its CEO.)

It has been posting solid financial results, with EBITDA (earnings before charges) of US$28 million in the first quarter on revenue of $174 million. Analysts have estimated the business to be worth almost $900 million.

GCX received a BB+ rating from Fitch Ratings when it raised $350 million from a bond issue in July. Fitch said the operator had $912 million in contracts to be recognized over the next three years. Most of the funds raised from the bond have gone to paying down debt, while around $100 million has been allocated to new infrastructure, including a new subsea cable between Singapore and Mumbai.

Barney said the next step would be to sell shares through a private placement and work towards an IPO, though he acknowledged that was "probably a couple of years away."


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He said GCX would spend about $10 million to $12 million a year on upgrading its existing points of presence (POPs) to support the new Cloud X platform, which the company expects will generate $100-$150 million in revenues within three years.

Cloud X is currently being tested by customers. As well as the "cloud nodes" that will support cloud services, the platform will also enable an automated orchestration layer by mid-2015.

Barney described Cloud X as offering a LAN-like experience, enabling direct connection to the application provider instead of going through the public internet. "Basically we're putting in Layer 4 switching capability that allows you to talk at the software layer."

The service will be targeted at what GCX calls the "emerging market corridor" across Asia-Pacific, the Middle East and Eastern Europe. GCX expects to sign up to 80 partners, ranging from enterprise apps firms to cloud providers such as Amazon.

Barney said he had first encountered GCX while working for a private equity company last year. "I was looking at it as a buyer, but being out of the business gave me perspective on the opportunity. With the cloud, we go from a $232 billion [telecom services] market to a massive multi-trillion market."

— Robert Clark, contributing editor, special to Light Reading

R Clark 10/21/2014 | 9:24:58 PM
Re: Glad to see the interest..and the optimsim... GCX is doing not too badly, but RCOM is carrying a lot of debt and the global arm is an obvious asset to sell.
MikeP688 10/21/2014 | 9:41:32 AM
Re: Glad to see the interest..and the optimsim... Glad to see the strategic fit--It is interesting that Ambani is willing to even consider letting go in lieu of the potential in the Indian Market and what Modi is trying to do to light a fire under the Indian Economy.    
R Clark 10/21/2014 | 2:56:08 AM
Re: Glad to see the interest..and the optimsim... I suspect Citic Telecom International is still a suitor but is haggling with Ambani over price. RCOM is trying to reduce debt and Citic is in no hurry. Citic would be a good owner: they already own an enterprise-focused operator, and it makes sense for them to pick up a global asset.
MikeP688 10/20/2014 | 4:30:58 PM
Glad to see the interest..and the optimsim... But my hope is that a true strategic visionary will invest which will enhance the capabilities. Will take his advise and keep an eye out as we continue to be witness to transformation ever more.

 

 
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