RCom to build $600 million undersea cable network

Mumbai: Reliance Communication (RCom), which is in the middle of a major debt restructuring, on Tuesday said it would construct a 22,000km undersea cable network at an investment of $600 million, a move that would help expand the company’s enterprise segment after it shut down its wireless service, a top company executive said.

RCom’s wholly owned unit, Global Cloud XChange (GCX), will build the new ‘Eagle express submarine cable systems’, which would span from Mumbai to Italy in the west and Hong Kong in the east.

Through the new cable system, GCX’s revenue would jump threefold to about $1 billion annually in the next five years, according to Bill Barney, who is RCom’s chief executive officer (CEO) and also chairman and CEO of Global Cloud XChange.

“We will be building the world’s largest submarine cable, replacing our existing cable system...like our previous systems, it will be funded from our partners,” Barney said at a press conference, adding that the new fibre network will focus on emerging markets from Japan to eastern Europe.

The announcement of the new ‘Cloud and Fiber’ initiative is line with the current effort to build a “new RCom” that focuses on providing various internet-related services, information technology applications as well as expanding data centre footprints.

“This is our largest investment in the fixed line space. The reality is this business (GCX) has been running pretty much separately. It has been highly successful in the past five years. When the old RCom goes out and the new RCom comes in, it will start to see that this is a very strong company,” he said.

On 27 December, RCom announced it had finalized a debt resolution plan, which involved sale of its assets, equity injection by global strategic partners and development of realty assets. Through this plan, the company expects to reduce its debt to Rs39,000 crore from the Rs45,000 crore it owed lenders by the end of October this year.

“The (enterprise) business was doing very well in the past three-four years. It will match up to not only with players in the Indian market but with overseas players as well... the challenge was we were actually setting up an enterprise business while we were taking down our wireless company...it’s not easy,” Barney said, adding that RCom’s enterprise business currently accounts for around 10-15% of the total revenue.

Last year, the firm had said it would shut down voice call services. The move followed its failure to merge with Aircel in October last year.