In late March, news began to dribble out that the transpacific cable PC-1 was for sale, and the two bidders were apparently the Japanese telecom giant NTT Communications (NYSE:NTT, news, filings) and privately held Pacnet. At the time, I put my money on NTT and if this were Vegas I would have won. Today NTT announced that it has entered into a contract to buy the cable from its private equity owners. Of course, it wasn’t exactly a longshot bet. NTT was by far the most logical place for the PC-1 to end up, in fact I’m surprised they didn’t acquire it sooner.
NTT will supposedly keep the PC-1 team in place, which makes sense given that they don’t have a parallel group anyway. Now, with its own undersea cable to the USA, NTT is well positioned to increase its influence beyond Japan. In an article last week Telecom Ramblings looked at the rising clout of NTT America, and this deal only serves to emphasize that presence. Might NTT use this acquisition as a stepping stone to further expansion? NTT+PC-1+Qwest-Longhaul? The only thing I see holding that concept back seems to be those pesky contracts with the US government.
As for Pacnet, there was no real chance they could outbid NTT if the latter decided to buy it, so I doubt this came as too much of a surprise. However, I continue to hear that Pacnet is talking to China Telecom and it is very possible that today’s M&A will trigger China Telecom (NYSE:CHA, news, filings) to make its own undersea grab.
If you haven't already, please take our Reader Survey! Just 3 questions to help us better understand who is reading Telecom Ramblings so we can serve you better!Categories: Mergers and Acquisitions · Undersea cables