Global Crossing's Annunziata on Racal Telecom Purchase: Comment
10/11/99 10:09:00 AM
Source: Bloomberg News
Geneva, Oct. 11 (Bloomberg) -- The following are comments by Bob Annunziata, chief executive of Global Crossing Ltd., a Hamilton,
Bermuda-based phone company that agreed to buy Racal Telecom from the U.K.'s Racal Electronics Plc for 1 billion pounds ($1.65 billion).
Why do you want to own this company?
''When you look at what we're building as Global Crossing, we have a network that spans 24 countries, 170
cities, we have submarine cables and we have fiber-optic networks. In Europe what we had is a network that's
linking 24 cities that will be turned up next year and we needed operations, so the Racal Telecom venture now
allows us to not only expand what's in London but also throughout the United Kingdom. It gives us close to
1,300 people to help us grow the business and grow the marketplace, so this is a very good synergy that
gave us capabilities.
''When you look at this combination together -- we expect by the beginning of the year we'll have this closed,
and when it's closed we can operate not only within the United Kingdom with Racal Telecom but worldwide.
So this plugs right into the global network so we can provide services from Manchester to Chicago real time or
how about London to Tokyo? So we have this network that no one else has.'' Do you plan more acquisitions in
Europe?
''When you look at our strategy we have our network built. We looked around to how fast can we build our
networks and time to market. If we see another company that fits our needs that's at the right price, we'll add it to it.'' On the company's
prospects in Asia:
''When we looked at our plan we said we wanted to own 100 percent of the network in Europe, 100 percent of the network in the United
States, because one-third of all the world's traffic is in Europe and one-third is in the U.S. We said in less developed parts of the world we'd
take in a partner so we brought in a partner. Microsoft and Softbank are our partners in Asia Global Crossing. That helps us work locally
with the people there and shares the financial risk. So we have our partners to address the world.'' Did you consider other European
companies instead of Racal?
''We have looked at many companies in Europe to see which would be a nice fit while we were in the process of closing Frontier but we
couldn't address anything until we closed Frontier. We closed with Frontier in the United States two weeks ago, two weeks later we got this
arrangement.'' Did you have to pay more for this company than you wanted to because Energis Plc was also bidding?
''I think we paid a fair value for this company. When you look at Energis and it's revenues and market valuation versus the revenues and
cash flows of this company, they're pretty much the same. So we did a pretty good operation here, we think it's good synergistically, and
it's exactly what Racal and Global Crossing did within two weeks.''
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