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Technology Stocks : Global Crossing - GX (formerly GBLX) -- Ignore unavailable to you. Want to Upgrade?

To: kellygreen who wrote (11547)	5/30/2001 8:15:48 AM
From: TechMkt	Respond to of 15615

I think DBAB refuted the idea that TAT-14 would not be coming online. Here is another article on TAT-14. It sounds like TAT-14 is already carrying traffic in an unprotected loop. Fez ____________________________ Major transatlantic cable project TAT-14 may be sunk By Simon Marshall, Total Telecom 30 May 2001 A group of incumbents and service providers is struggling to bring the TAT-14 transatlantic cable online, and having delayed its launch for six months already, may be considering halting the project altogether. According to a recent Goldman Sachs investment research report seen by Total Telecom, technical problems with the cable on the Europe/U.S. crossing combined with dropping prices on the route mean relative costs for the consortium of owners - including Concert, WorldCom, Cable & Wireless, Deutsche Telekom and France Telecom - are rising all the time. This may well benefit the private transatlantic companies such as Global Crossing, Tycom, Flag Telecom or 360networks if members of the TAT-14 consortium decide to scrap the project and seek alternative capacity on the same route. The report said, "We believe there is a strong possibility that TAT-14 may be halted altogether, and this would make it increasingly difficult to recoup investments given rapidly declining Atlantic prices." Cable & Wireless dismissed the report in comment to Total Telecom as "rumor or speculation." Even if the alleged technical difficulties are overcome, further significant delays will see the TAT-14 consortium buying or leasing capacity from the private operators to make up the shortfall. Goldman Sachs sees this as "clearly positive news for the private sub-sea operators in this space ... Tycom, Flag Telecom and 360networks have the greatest Atlantic exposure, and would benefit most from the expected news." TAT-14 was originally scheduled to come online last December, but has now been delayed until at least July or August. Although it is termed a "club cable," because it is owned by a consortium and purpose-built to soak up anticipated capacity demand, it will, according to Goldman Sachs, represent a reduction of "40% of the incremental [new] capacity we had been forecasting on the Atlantic route in 2001." The financial house forecast 1,595 gigabits per second of incremental lit capacity to come online this year, outstripping demand of 1,197 Gbps. These figures are largely the result of several European carrier networks coming online simultaneously, and not an attempt to flood the market. But a loss of 640 Gbps if the TAT-14 project is terminated would tip the scales away from supply and in favor of demand. Goldman Sachs said this should help stabilize transatlantic pricing and lead to upside revenues for the private sub-sea operators, contributing to a greater price-balancing effect expected by 2003, and "reducing the magnitude of future price declines." Concert declined to comment, and both Global Crossing and Flag Telecom were unavailable. Deutsche Telekom increased the total capacity provided by Bermuda-based Global Crossing on its AC-1 transatlantic cable to 35 Gbps in a deal during February last year.