Telecom giant taking Asia by storm
Bloomberg News Service
LOS ANGELES — In less than 15 months at Asia Global Crossing Ltd., Chief Executive John Legere has persuaded eight companies to join the telecommunications service provider's plan to build a network throughout Asia.
Legere, 42, has the connections, having worked in the region since 1992 for AT&T Corp. and Dell Computer Corp. His contacts have generated business for Asia Global, a venture of Global Crossing Ltd., Microsoft Corp. and Softbank Corp.
"I know all the governments, I know all the families, which makes this job I'm in fairly easy," Legere said in an interview.
Asia Global has forged links with telecommunications companies such as Korea's Dacom Corp., in addition to Singapore Technologies. It has sold access to its network to Deutsche Telekom AG and the Society of Worldwide Interbank Financial Telecommunications, a cooperative of 7,000 financial institutions in 190 countries. Cable & Wireless Plc also is a customer.
Local partners like Dacom "are very, very powerful," said Donna Jaegers, an Invesco Funds Group Inc. analyst. The firm has been buying Asia Global shares. "If you're trying to get traffic onto a network, you've got to do something other than land the cable on the shore and invite people to come."
Asia Global yesterday said its first-quarter loss widened to $60.7 million, or 11 cents a share, on higher depreciation, operation and maintenance costs from $43.9 million, or 9 cents, a year earlier. That beat expectations of a 16-cent loss from three analysts surveyed by First Call/Thomson Financial.
Legere, whose voice reflects his Fitchburg, Mass., roots, isn't worried. "The world is really frowning on anybody who's looking for money, and people are very cautiously, incrementally spending" on capital projects, he said.
On April 18, for example, TyCom Ltd. and Flag Telecom Holdings Ltd., both planning to build Asian networks, agreed to share a single underwater system built by TyCom, eliminating at least one competitor.
Asia Global, formed in September 1999, operates in Japan and Hong Kong and has equipment ready to provide service in China when the government permits competition. Equipment will be activated in Taiwan, South Korea and Singapore this year, Malaysia and the Philippines in 2002.
The company will sell time on the networks it is building in each country to other phone companies and to corporations. East Asia Crossing, a $1.3 billion project, will link these networks.
Legere and his team "consider issues thoroughly and quickly, which leads to rapid clarification and resolution," said John Poston, a senior vice president at Singapore's StarHub Pte. StarHub and Asia Global have agreed to build a network linking Singapore with a portion of Asia Global's regional cable.
To succeed in Asia, "American companies must first align themselves with the Asian companies to get to the end user, and that's what they're doing," said Deutsche Banc Alex. Brown analyst Rohit Chopra.
Legere, a father of two daughters who drives a silver Porsche when he's home in Los Angeles, recognizes the size of the opportunity ahead.
The Asian telecommunications market is growing at 12 percent a year, compared to 7 percent annual growth globally, he said at the company's March analyst meeting.
Internet use is growing 35 percent a year, or 43 percent a year excluding Japan.
"Very, very senior people at NTT refer to us as one of their biggest future competitors," Legere said. Nippon Telegraph & Telephone Corp. is the world's largest phone company by sales. "That's a long way to come in a short period of time."
