Declining revenues and competition hit Global Crossing hard

16 Nov 2004

Losses for Bermuda-based Global Crossing widened by 28% to USD102 million in the three months to 30 September 2004, from USD80 million a year ago, as increased competition and lower revenues combined to hit the company’s bottom line. Global reported that sales dipped by 11% to USD617 million, down from USD696 million a year ago, partly the result of a USD18 million decline in ILD carrier revenues and USD20 million in write-downs. However, Global also reported a significant USD41 million drop in revenues for its core legacy small business group and trader voice lines as a result of continuing pricing pressures, but said this was partly offset by growth from IP-related products. Commercial services accounted for 40% of total revenues, with carrier services generating the remainder. Voice services made up 53% of the company’s commercial services turnover.

Despite the poor performance, Global Crossing says it is still on course to complete its recapitalisation programme and raise USD400 million to sustain its long-term funding needs and refinance a bridging loan provided by new majority shareholder ST Telemedia. Global says that most of the previously announced restructuring costs of around USD20 million will fall in the fourth quarter. It plans to cut 600 jobs and reduce or exit a number of operations – mostly voice-services related – to focus on selling internet and data services.

Bermuda