Asia: Global Crossing to remain intact
Overnight, Hamilton, Bermuda-based Global Crossing announced its Chapter 11 proceedings, and a $750 million cash injection by Hong Kong's Hutchison Whampoa Ltd. and Singapore Technologies Telemedia Pte Ltd. for a joint majority stake. The proposed investment is conditional on the confirmation of a reorganization plan by the courts before the end of August 2002.
In a telephone interview today, Asia Global Crossing spokesperson Selene Lo said it is "business-as-usual" for the company, which is 58.8 percent owned by Global Crossing.
"I see no interruption in our services and staffing, as we operate independently of Global Crossing with a separate listing on the New York Stock Exchange," Lo said.
She added that Asia Global Crossing does not rely on funding from its parent company. Both firms offer telecommunications and IP services on a wholesale basis through undersea cables, terrestrial networks and data centers.
Asia Global Crossing has offices in Hong Kong, Japan, Taiwan, the Philippines, Korea and Singapore, with about 500 employees, said Lo.
The company also operates joint ventures with telecommunications service providers in each of the Asian markets, including Hutchison Whampoa and Singapore Technologies Telemedia (through its subsidiary StarHub Pte Ltd.).
Asia Global Crossing and Hutchison Whampoa each owns 50 percent of Hutchison Global Crossing, which provides fixed line, Internet and data services in Hong Kong. Asia Global Crossing and StarHub each owns 50 percent of StarHub Crossing, which operates a high-capacity back-haul network in Singapore.
The other regional joint ventures are: Global Access Ltd. in Japan (in partnership with Marubeni); Digitel Crossing in the Philippines (with Digital Telecommunications); Asia Global Crossing Taiwan (with Microelectronics Technology); and Dacom Crossing in Korea (with Dacom).
"The services of our various ventures are targeted at different customers, and we have a different business approach in each country," Lo said, emphasizing that no operational consolidation or closure is looming.
Besides, the company expects to be EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) positive at the end of 2002, she said. EBITDA looks at the cash flow of a company.
Meanwhile, Global Crossing incurred a huge debt from building its global network, which links more than 200 major cities in 27 countries. It saw its shares fall about 96 percent in the past year, closing on Friday at $0.51.
Asia Global Crossing operates the $1.3 billion East Asia Crossing submarine cable system, which last month arrived in Singapore to directly link businesses here to Hong Kong, Japan, Taiwan and Korea. Asia Global Crossing's other network is the 20,900km Pacific Crossing, which connects the U.S. and Japan. The rest of the company's major shareholders include Softbank and Microsoft.