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Global Crossing (Nearly) Sold To Singapore
sQuEeDeN writes "According to money.cnn.com, the sale of Global Crossing to STT (Singapore Technologies Telemedia) has been permitted by the administration. There originally were concerns about this sale by the DoD/ DOHS but, by what I assume to be much behind-the-scenes negotiating, such concerns have been alleviated. Ultimately this shouldn't [knock] matter much but it's always interesting to see where your bandwidth comes from. We'll see what it means for the U.S. to have it's global bandwidth be owned by, well, someone else."
You have to remember that even though Global Crossing seems ubiquitous, the company is only four years old (formed in 1999 from a merger between a Bermuda-based fiber-optic company and a local US telecom operator), and really died at the age of two--it was run into the ground by the end of 2001, buried in accounting scandals, and filed for bankruptcy in January of 2002. All it has going for it is a widespread physical infrastructure (most of which it doesn't even own outright, with liabilities in the tens of billions of dollars). I say good riddance; let Singapore have them. The only unfortunate thing is that GC's public shareholders will get nothing--that's a big fat $0--from this deal.
It's hard for thee to kick against the pricks.
Global Crossing's biggest claim to fame is its undersea cables. It was one of a very small number of companies -- two or three -- to own ships capable of laying undersea cable. Global Crossing's original mission was to build a network of modern, high-speed undersea cables linking the major continents. Not only would this be useful as part of their own network, but they could resell capacity to other companies that didn't have a fleet of their own.
The missing part of that plan was a connection across the continental U.S., so they set out to acquire a landline fiber network. They purchased Frontier Corporation for their nationwide fiber. Frontier was formerly Rochester Telephone of Rochester, NY, one of the largest local telephone companies that was never part of the Bell System.
I can remember the days when transferring a file from overseas was done only as a last resort, because the Internet links across the oceans were low-bandwidth copper or satellite links. Global Crossing's undersea fiber, and the competition it spurred, brought that era to an end.
Technically, Global Crossing is a Bermuda corporation; that's a tax dodge used by a number of companies because of Bermuda's very liberal attitude towards incorporation and taxes. (The prerequisite "corporate presence" in the company can consist of a mailbox, for example. It's not a major hardship for a Board of Directors to hold at least one meeting annually in Bermuda, either.)
The reason that Global Crossing's sale to a Singapore concern is of national interest is Global Crossing's contracts with the U.S. Government. Because of its undersea fiber, Global Crossing is one of a few companies that can provide the government with a worldwide communications network that isn't sub-leased. The Department of Defense has several contracts with Global Crossing. They were concerned about their calls and data being sent over a network owned by ST Telemedia, which is itself owned by the Singapore government.
More worrisome was the original plan, in which ST Telemedia would share ownership with Hutchinson Whampoa Ltd., a company controlled by Hong Kong billionaire Li Ka-shing, believed to be closely tied to the Chinese government. ST Telemedia bought out Hutchinson's share in the reorganization plan, probably helping clear the way for the approval. It's hard to imagine the U.S. government permitting Department of Defense communications networks to be partly owned by the Chinese.