Bush OKs Singapore, Global deal (Global Crossing)

CNN Asia ^

[maui_hawaii]

WASHINGTON (CNN) -- U.S. President George W. Bush has told Congress the administration will allow Singapore Technologies Telemedia to buy a 61.5 percent stake in the U.S. telecommunications firm Global Crossing Ltd.

Singapore Technologies is indirectly owned by the government of Singapore, and because of that the administration was required to conduct a review to determine if there were any significant national security concerns in the transaction.

[CasearianDaoist]

I do not understand why no one outside of Asia bid on this. It seems like a steal. All those assets for $250mil. I do not understand it. YOu would think that a baby bell would buy it - that is chump change.

[maui_hawaii]

I would assume that the competition in America already has presence here.

Asian companies might be aiming to expand their footprint globally, ie buy their way into the market.

[Finalapproach29er]

This company gave Bush Sr. millions in stock. McCaullife made millions also. Bi-partisan corruption. Shameful. Everybody in government wants to line their pockets.

[MamaLucci]

I guess the good news is that the ChiCom front company didn't
acquire GX.

[jas3]

Few were willing to bid because the market is enormously saturated. There is such incredible excess capacity that it will take years for the market to clear itself.

Do a little math and figure out the total bandwidth in use at any one time on Global Crossing's network. Then multiply by $30 per Mbit per month. The revenues are chump change too.

Add to that the emergence of MCI/UUNet from Ch11 and you've got the makings of another bandwidth price war.

[ohmage]

It seems like a steal. All those assets for $250mil. I do not understand it.

Neither do I. Especially when a year and a half ago, HW and STT was reportedly offering 3x as much for control of Global Crossing.

Must be that time value of money thing. Or Global Crossing had a silent auction and AT&T already purchased their fleet .

From China Brief

When Global Crossing filed a Chapter 11 bankruptcy on January 28, Hutchison Whampoa and Singapore Technologies Telemedia offered a US$750 million cash investment for a joint majority (79 percent) stake in the company. Global Crossing's management welcomed the deal, but some shareholders and creditors have objected. If the deal holds up, it would put a major international communications network, one used by the U.S. military and other government agencies, into the hands of a potential foreign adversary. Chinese military doctrine stresses information warfare and sabotage of communications systems as a key to successful asymmetrical warfare against the United States. Thomas Casey's seat on the NSTAC would thus seem inappropriate.

[Johnbalaya]

We've probably switched over to other secure communications over the past 20 months since Globla Crossing went bankrupt. We could use it as a source of disinformation if the foreign governments still think we're tied into it.

[CasearianDaoist]

Yes, I think that there must be some hidden poison in the firm. It makes no sense. Either that or it is some sort of sweatheart deal prompted by political concerns (I do not understand that one either.)

I do know that the military is moving to their own internal network for classified and combat operational data. That does not,of courese keep someone from screwing up the country at large. Internet2 should start coming out of the woodwork in the next few years. I wonder if insiders are expecting an entire new wave of build out?

Again, I am mystified, and I have some experience in the business.

[CasearianDaoist]

Yes, but it is so cheap. Just getting the fiber is worth it - just sitting on the fiber for a few years would be worth it. They must not be able to strip off the debt.

[ohmage]

Another good reason to discount the price!

Them Chinese, they didn't just fall off that intelligence hay wagon, did they? Even without the previous administrations help it looks like they must have figured that one out, judging from the price cut.

[ohmage]

YOu would think that a baby bell would buy it

One more post before I sleep. As I recall, NYNEX was one of the original Global Crossing backers. I think they were disappointed with the experience and divested themselves of GC after they became Bell Atlantic.

Maybe it left a bad taste behind.

[jas3]

Maybe it is, maybe it isn't. It depends what other fiber is worth.

The fiber requires servicing, and a substantial capital outlay.

Moreover, fiber isn't quite a finite resource like three gallons of gas. New technologies allow old fiber to carry ever more traffic at higher bitrates and at different frequencies and over longer distances. Merely by installing new equipment every few hundred miles old fiber gets a new lease on life.

How many years would you guess until the glut of fiber capacity is no more?

Remember that when in US history railroads and canals were overbuilt, many of them ended up being worth zero.

Think what Cogent bought PSINet's US network assets for out of bankruptcy! A mere $10 million. PSINet spent at least $250 million building out this network.

[CasearianDaoist]

How many years would you guess until the glut of fiber capacity is no more? My bet is 5 years, assuming that we are beginnig a new business cycle. That includes using new technologies to get better transmision rates out of the fiber.

[jas3]

Interesting question, eh?

I don't want to guess myself, but usage tends to double every couple years. We'll see what that means for the current capacity glut.

[lelio]

I guess the good news is that the ChiCom front company didn't acquire GX.

Its been replaced by a Signapore government owned company with ties to China. I'm not feeling all warm and cuddly.

Whatever happened to IDT's bit for Global? IIRC it was about the same as the ChiCom one which is the same as the Signapore government owned company one.

[batter]

MH - good catch.

Lelio - I felt somewhat happy until I came to your comment re: the chicom connection :-(. The PRC has been courting the SE asia countries. They've been going to Singapore quite frequently too. I'm assuming that the Homeland Security officials still have reservations about the deal...do you have any info if their concerns have been resolved (the article makes it sound that they are still unresolved)?