Level 3 could leverage Global Crossing's managed services experience in US

Tuesday, April 12, 2011

Boosting content traffic between the US and Latin America will be one of the principal areas to benefit from Level 3's (Nasdaq: LVLT) US$3bn takeover of Global Crossing (Nasdaq: GLBC), but the company could also leverage Global Crossing's experience in managed services for the US market, Level 3 CEO Jim Crowe told BNamericas.

US fiber-based communications services provider Level 3 said on Monday (Apr 11) that it would acquire Global Crossing to create a company with combined revenues of US$6.26bn, allowing the former to expand its global footprint.

"I would consider Global Crossing's Latin American footprint one of the lynchpins of the deal," Crowe said.

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"One of most exciting parts of the transaction is the ability to use Global Crossing's extraordinary facilities and people in South America, their undersea capability and our North America network, content distribution and other services to move huge amounts of content up and down the two continents," he added.

The extra capacity in South America will be a timely addition for Level 3's growing content delivery business ahead of the 2014 World Cup and 2016 Summer Olympics, both to be held in Brazil.

The executive said that content means not only TV, but also social media and leveraging the huge demand for mobile broadband coming from emerging markets.

Last year, Global Crossing acquired US video fiber network operator Genesis Network to accelerate the company's efforts to build a solid presence in the video transport sector.

Crowe said Level 3 has a similar unit in the US called Vivyx, which offers video caching in data centers to handle large amounts of video traffic and which will be a huge complement to Global Crossing's Latin American business.


Besides offering wholesale international IP traffic connectivity, Global Crossing has distinguished itself in recent years for its hosting, managed services and collaboration service, which it has offered from a set of 15 data centers and metropolitan networks around Latin America that were largely inherited in the acquisition of Impsat in 2006.

Global Crossing has since used the experience to export the idea to several new locations in Europe.

Level 3 already has what Crowe calls "one of the biggest data center networks in the world," with 6mn square feet and 120 locations. One of the takeover's draws was leveraging that network to expand Level 3's portfolio of services.

"We offer a much simpler, less value-added set of services than Global Crossing does. They have cloud-based, managed services. We've not built that capability, so adding that capability on top of our data center services is one of the real exciting possibilities for the joint group," he said.

He added that what Global Crossing calls its invest and grow business - or the end of business focused on serving global enterprises and carrier customers, excluding wholesale voice - is of great interest to Level 3 and could potentially be exported to the US.

"The fact that Global Crossing has developed a mature set of services in Latin America, and now has experience of taking that set of services to a new location, gives us a lot of confidence that the joint company could do the same and move those kinds of services into the US," Crowe said.