XO Holdings (news, filings) has inked a deal with Pacific Crossing for capacity on the PC-1 cable, hooking up at Grover Beach with access to Japan, targeting Asian customers. This is a new and somewhat surprising move by XO, which as recently as July had little capex to spend on expansion. The refinancing of their debt by majority owner Carl Icahn gave them enough cash to do something, and I have been waiting to see what they might have on the drawing board. Apparently, it was a giant picture of Asia.
Well, that's not too surprising in a general strategic framework I guess. Everyone has Asia in their sights right now, so much more data is coming in and out of the region that it cannot be ignored. But here we're talking about XO, which has little of an international client base. Its offerings have always been national and regional ones, and the international bandwidth market is not underserved.
This move by itself seems odd, is there more in the works? To really make a dent, doesn't XO have to extend its footprint further? After all, this deal is for 160Gbps, and that's not something one buys for a single customer. It's not an idle purchase, but it doesn't seem to stand alone either. Next up, a followup link to Hong Kong and Singapore? Or maybe capacity on the Southern Cross to Australia and New Zealand?
Recession or no recession, this plus the Verizon mesh expansion to Singapore imply that carriers feel they cannot cut back on Asia. I'll bet we see more of this as the year goes on.
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