20 January 2004
CommsDayAsia

Today
REACH & FLAG HERALD COLLABORATIVE TRANSFORMATION: Comments from CEOs at both major carriers suggest expansion is back on the agenda despite ongoing pricing pressure.
SIEMENS WINS IRAQ DEAL ON EVE OF WIRELESS SERVICES LAUNCH: Siemens becomes the first German company to announce a controversial Iraqi tender win with its mobile network supply deal.
XO INTEREST SUGGESTS BIDDING WAR AHEAD FOR C&W AMERICA: XO Communications bids for the bankrupt C&W division, signaling a possible bidding war against Gores Technology Group.
OPERATORS BEGIN TO SEE WIMAX POTENTIAL: The WiMAX Forum claims to have doubled its membership in the past five months as operators become more interested in the technology.

Top Stories
Reach & FLAG herald collaborative transformation
Major regional submarine cable operators are actively talking up the potential for collaboration in the global capacity business, claiming the industry is now poised for a year of transformation through new partnerships and joint ventures. Comments from both Reach CEO Dick Simpson and FLAG Telecom CEO Patrick Gallagher suggest that expansion is well and truly back on the agenda, despite the on-going pressure of over-capacity and price compression forcing them to act in a
considered manner.

Industry observers have keenly awaited 2004, with some seeing the emergence of Global Crossing and WorldCom from Chapter 11 protection as a potential rebirth for the global cable industry at large. And now, with the merger of FLAG Telecom and India’s Reliance Gateway complete, attention is again turning to new emerging markets and the potential for growth.

A week on from the closure of its merger with Reliance, FLAG’s Gallagher said the company is now evaluating a series of proposals for expansion and “focused strategic investments.” While shying away from suggestions that direct acquisitions could play a part in that, he did confirm that FLAG is actively exploring ways to capitalise on its stability, possibly through expanding its infrastructure to new markets.

“We live in interesting times for the wholesale industry,” Gallagher told CommsDayAsia yesterday. “FLAG is constantly meeting customers and partners seeking strategic solutions of mutual benefit. This may take the form of new regional spurs – either cable builds or VPoPs [Virtual Points of Presence enabling access to non-liberalised markets though JVs with incumbent operators], as well as new products and services.”

Gallagher’s thoughts ring true with those of Reach CEO Dick Simpson, who said last week that collaboration was likely to be the main method of expansion for the year ahead as carriers continue to monitor customer demand and their financial stability. “We are hopeful about the industry outlook in 2004 as the general economic condition improves,” Simpson said at the annual Pacific Telecommunications Council meeting in Hawaii. “We see 2004 as the transformation year,” he added, pointing to what he terms a cautious approach to investment and expansion emerging throughout the industry. “Instead of making heavy investments in infrastructure and operation, telcos are increasingly looking to focus resources on core businesses and expand by working with other carriers,” Simpson said.

The Reach CEO failed to pinpoint just how the company plans to increase its presence this year, although he did add that it will continue to develop opportunities for channel partnerships while focusing on and improving core business.

While both Reach and FLAG are yet to provide their own examples of collaboration in the market, the comments of their CEOs ring true with some recent activity by other carriers. Most notably, Global Crossing last week deepened its relationship with US fibre operator XO Communications, a company only months ago suspected to be mounting a full bid for control of the now Singapore Technologies Telemedia-controlled firm. Executives at last year’s Telecom World gabfest in Geneva
pinned collaboration at the top of the priority list for carrier survival in 2004.

Tim Marshall