Three of the biggest names in technology Wednesday signed a joint venture deal to create Asia Global Crossing, which will offer advanced network services in Asia.
Global Crossing (GBLX) will operate the network, with Microsoft (MSFT) and Softbank each kicking in a $175 million investment and a $200 million capacity commitment over three years. The joint venture will offer Web hosting, IP telephony, and e-commerce, among other Internet services.
Global Crossing will build a $1.3 billion broadband network dubbed the East Asia Crossing, which will be connected by Pacific Crossing 1 to the rest of the company’s global network.
Global Crossing will contribute its 57.75 percent ownership of the Pacific Crossing 1 trans-Pacific subsea loop, which the company expects to be operational within four months. Under the terms of the deal, Global Crossing will also release its development rights in East Asia Crossing.
The East Asia Crossing network will connect Japan, China, Singapore, Hong Kong, Taiwan, South Korea, Malaysia and the Philippines through terrestrial rings and underwater cables. Eventually, the joint venture plans to extend the network to include Thailand, Indonesia and other major cities in the region.
“The Asian economy is moving rapidly into the Internet era,” added Masayoshi Son, president and chief executive officer of Softbank Corp. Son added that the Asia Global Crossing venture complements Softbank’s recent Speednet joint venture deal with Microsoft and the Tokyo Electric Power Company for broadband access.
Global Crossing will own 93 percent of the venture. Softbank and Microsoft will each take a 3.5 percent stake; if the market valuation of the company hits $5 billion, both will have the option to increase equity up to 19 percent.
“The future of our business and telecommunications is
increasingly linked, and our interest in the telecom field is broad,” said Steve Ballmer, president of Microsoft. “Our strategy is to partner with providers who can provide the interconnectivity we need to deliver advanced broadband services and software.”
East Asia Crossing is scheduled to be built by the end of next year.