Global Crossing, Microsoft and Softbank yesterday unveiled plans to form a joint venture called Asia Global Crossing that initially will build a $US1.3 billion pan-Asian fibre-optic network.
Called the East Asia Crossing, the 17,700-kilometre network will link Japan, China, Singapore, Hong Kong, Taiwan, South Korea, Malaysia and the Philippines, according to officials from the three companies. The broadband network will be used to carry voice and data services, and will also be connected via the Pacific Crossing 1 system to the US and the remainder of Global Crossing's worldwide network, the officials said.
Global Crossing will hold 93 per cent of the venture, while Microsoft and Softbank will each contribute $175 million for a combined 7 per cent stake, the companies said. The US software giant and the Japanese company also agreed to buy a total of at least $200 million worth of Global Crossing services over the next three years.
When the "fair market value" of Asia Global Crossing reaches over $5 billion, the ownership interests of Microsoft and Softbank will be increased to a maximum of 19 per cent each at valuations of $7.5 billion and above, the companies said.
Global Crossing vice chairman Jack Scanlon will serve as the chief executive officer of Asia Global Crossing, and Global Crossing will control a majority of seats on the new company's board of directors, according to the companies.
Hamilton, Bermuda-based Global Crossing is the fast-rising undersea cable operator that last month lost a bidding war with Qwest Communications International Inc for long-distance operator US West Inc. At that time, Global Crossing reached an agreement to acquire another carrier, Frontier Corp, but has since watched its share price slide as a result of the move. Last week, Global Crossing was forced to renegotiate the terms of its planned acquisition of Frontier.
In recent weeks, Global Crossing has redoubled its efforts in Asia. In late August the company tapped Darryl Green to head Global Crossing Japan. An AT&T Corp veteran, Green was most recently president and chief executive officer of AT&T Japan.
On Tuesday, Global Crossing bought a 49 per cent stake in a venture led by China Telecom that installs and maintains undersea cable systems.
Microsoft and Softbank, meanwhile, last month joined a Japanese electric power company in a deal that will provide wireless Internet access to Japanese homes.