The deal involved Asia Netcom - a new company organized by China Netcom (Hong Kong), New Bridge Capital and the Softbank Asia Infrastructure Fund - and AGC.

AGC is 59 per cent owned by US-based Global Crossing, which went bankrupt in January. AGC's other major shareholders include Microsoft and Softbank.

Asia Netcom will need about US$120 million of new equity from consortium members and additional bank financing for the future operations of AGC, according to statement from AGC.

The parties expect the Asia Netcom transaction to close during the first quarter of 2003.

Edward Tian, chief executive officer of China Netcom, said AGC's pan-Asia submarine cable network is very important for its expansion.

"By allowing AGC's network to connect with China Netcom's extensive nationwide network and strong domestic customer base in China, we can also help enhance Asia Netcom's services to both existing and new customers," Tian said.

AGC's networks connect the major commercial cities of Tokyo, Osaka, Hong Kong, Taipei, Seoul and Singapore. It also links Asia to the United States via a trans-Pacific network.

AGC's trans-Pacific network is another crucial part of the picture, industry insiders noted.

Linking Asia and the United States, the network provides rich business opportunities with increasing information exchanges between the two continents.

Tian said he believed the newly recapitalized company will be well positioned to capture a large share of the future data communications needs of carriers and enterprises in the region.

According to industry analyst International Data Corp, revenue from broadband services in China is set to double next year and the Asia-Pacific region remains one of the fastest growing areas in the global telecom market.

With AGC's pan-Asia subsea network, its city-to-city data service platform and access to China Netcom's extensive network across the Chinese mainland, Asia Netcom will eventually capitalize on the Asia-Pacific opportunity and capture a large share of traffic starting and ending on the Chinese mainland, analysts said.

"Asia Netcom will build upon the strengths of AGC's existing operations, but its value and service proposition will be greatly enhanced by the restructure," said Jack Scanlon, vice-chairman and chief executive officer of AGC.

Industry experts said the acquisition of AGC is a crucial step for China Netcom's expansion to the international telecom market. As a subsidiary of China Netcom Communication Group Corp, China Netcom is a record maker among its domestic peers.

(China Daily November 19, 2002)