Asian Pacific Overview
“Their Time Has Come” The shift in market dynamics has been remarkably rapid. In 2002, the Chinese government split China Telecom in two and created a government-owned second operator, China Netcom, whose first major initiative was to acquire the assets of Asia Global Crossing, which included the pan-Asian submarine cable system, “EAC”, and to form an international arm, known as Asia Netcom. Investment in Transpacific & Asia Pacific Submarine Fiber Optic Systems 1999-2005
Source : Pioneer Consulting, LLC
“Sleeping Giants Awaken in Asia” By Julian Rawle China & India begin to make an impact but each giant is treading a different path
Ever since the submarine fibre optic cable industry went into its latest slump, the wise money has been on the Asia Pacific region providing the demand growth required for a revival. While other regions, such as the Caribbean and the Persian Gulf, are spawning small-scale opportunities, the Asian population multiplier is impossible to ignore. Little wonder then, that the first increase in annual capital investment in the industry for four years consists almost entirely of projects located in Asia.
But there is a new dynamic in the Asia Pacific submarine fibre optic cable industry. Gone are the days of the entrepreneur with deep pockets and no pedigree in the industry. The collapse in bandwidth prices brought about by over-capacity and hyper-competition has more or less cleared the field for incumbent telco’s to re-assert their dominance. Moreover, the traditional global operators, such as MCI, AT&T, BT, and Cable & Wireless, no longer have the appetite for sinking millions of dollars into the World’s oceans. Instead, regional incumbents are coming to the fore, taking advantage of ongoing industry consolidation and distressed assets, and the leaders among this group are companies from China and India.
China Netcom’s next step was to approach PCCW with a view to acquiring the latter’s Hong Kong assets. This deal is still in the balance but it reveals that China Netcom will not be content with simply developing its existing market. For its part, there are strong rumours that Asia Netcom intends to activate the branching unit from EAC into the Chinese mainland: something which Asia Global Crossing could never get permission to do. In November 2004, China Netcom made an initial public offering of its shares in Hong Kong and New York. Much to the surprise of many analysts, the offering was many times oversubscribed and the company netted over US$1.1 billion in fresh funds to continue to develop its network in mainland China and elsewhere. Meanwhile, at the other end of the region, the Indian government has unleashed a frenzied programme of telecom de-regulation 14