Capacity has an exclusive piece out this morning on the future of Reliance Communications' international arm, Global Cloud Xchange. Apparently there are three bidders at the table, but everything is on hold until the future of Rcom's other assets is out of limbo. But after years of false starts, I suspect the endgame is finally here.
Capacity says that one of the bidders is a carrier, one is a private equity group, and one is a combination of both, and that all three support the Eagle project to link Mumbai to Italy with a new cable system. Two are interested in all of GCX and one is just looking at the international connectivity piece. They didn't name any names, except that Russia Sistema is not involved anymore. But that doesn't mean we can't make a few guesses.
So who might be on the list? The private equity groups could be anyone, but let's talk about a few possibilities on the carrier side:
- Telxius - Owned by both Telefonica and the private equity group KKR, Telxius is my best guess for the 'combination' bidder. They already own various submarine cable assets, which would fit quite well, but probably wouldn't be bidding for the Indian enterprise/data center side of the business.
- CenturyLink - With the integration of Level 3 into the company now well underway, CenturyLink inherits Level 3's international ambitions as well. I can envision the carrier interested in both the subsea and backbone assets, as a means of adding scale to the Level 3 footprint outside of the US and EMEA, and also in the enterprise/colo assets in India as a means to establish a footprint there. That being said, it's not entirely clear to me yet just how CenturyLink's appetite will manifest after the Level 3 deal. Will it's international desires be quenched by CenturyLink's US focus, or will their conquest of scale in the US give them a reason to look aggressively abroad now?
- GTT - GTT is busy closing and preparing to integrate Interoute, but given how aggressive the company has been in M&A one can't discount the possibility. The global assets would be a good fit with their existing backbone, adding yet more fiber to the company's diet as well as scale in APAC. That being said, it would surprise me (again) if GTT were ready to make this play.
- Orange - They rarely seem to take the M&A route, but that doesn't mean they won't. The opportunity to crack the Indian market might be tempting to Orange Business/Wholesale, and they are no stranger to subsea assets and projects of varying ages.
- Vodafone - Combining the GCX assets with the former C&W Worldwide assets could be an interesting play. However, Vodafone seems more interested in the last mile side of things with its deal with Liberty yet to close.
- AT&T, Verizon - They have the means of course. But until they show interest in anything beyond the wireless business, I'm going to continue to doubt it.
- Tata Communications - One Indian conglomerate's international telecom and subsea cable arm buying another? The fit would be fine, and who knows what the country's regulators would say. Yet Tata doesn't seem to be in a position to or to have the inclination to make such a move move.
- Telstra - Combine GCX with the former Pacnet assets and the new Eagle system, and maybe you have something interesting?
- NTT Communications - NTT Com's global backbone wouldn't be hurt by adding GCX's fiber to its diet, and the company has already dabbled in the Indian data center and enterprise market a bit. I could very easily see them sitting at the table.
- Telia - After its other experiences in Asian markets, I sort of doubt Telia wants to put down roots on the Indian subcontinent right now, but the global backbone business might be an interesting fit. I doubt they're at this particular table though.
- ST Telemedia - If there's a Singaporean presence at the table, it's probably these guys. I suppose they'd be in the private equity bucket, though one of their portfolio companies could be involved to make them the combination bidder.
I think the combination carrier/PE bidder is probably Telxius, while the carrier at the table harder to gauge. I'd give a plurality of the vote to NTT Communications though. Feel free to tell me otherwise in the comments below!
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